The Bombay High Court delivered its order for Writ Petition (L) No. 24366 of 2025 on October 6, 2025, in the case of KMG Wires Private Limited versus The National Faceless Assessment Centre, Delhi & Others.
Key Details of the Order
- Case Title: KMG Wires Private Limited vs. The National Faceless Assessment Centre, Delhi & Others.
- Bench: Justices B.P. Colabawalla and Amit S. Jamsandekar.
- Date of Order: October 6, 2025.
- Subject: The petition challenged an income tax assessment order for the Assessment Year 2023-24, where the petitioner’s total income was assessed at ₹27.91 Crores.
- Ruling: The High Court set aside the faceless assessment order, ruling that it was a “complete breach of natural justice”.
- Grounds for the Decision: The Court found that the tax authorities (National Faceless Assessment Centre) had relied on non-existent case laws, which were likely the result of an AI “hallucination” in their automated decision-support systems. The authorities also ignored the taxpayer’s reply, violating the principles of a fair hearing and natural justice.
- Significance: The judgment is a significant ruling on the use of artificial intelligence in quasi-judicial processes, emphasizing the need for human oversight, transparency, and accountability.
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