Did hallucinating AI mess with a tax tribunal order?

NEW DELHI: A recent tax tribunal order that cited fictitious court judgments before it was hastily withdrawn has raised suspicions about the potential use of Generative AI-a transformative technology that has swept the world but has occasionally made up stuff.

- Shipra Singh

In December, the Bengaluru bench of the Income Tax Appellate Tribunal (ITAT) passed an order citing three Supreme Court judgments and one Madras high court judge- ment that did not exist. In just a week, the order was withdrawn, citing “inadvertent” errors.

The case involving Buckeye Trust before the ITAT’s Benga- luru bench pertained to the taxa- bility of a transaction in which a person settled (created) a trust worth ₹669 crore, mainly by transferring interest in a part- nership to the trust. Normally, transfers without consideration to non-relatives above ₹50,000 are taxable in the hands of the recipient. Buckeye’s lawyers argued that interest in a partnership is not property within the meaning of the tax law, among other submissions.

After hearing the argument, the tribunal held that an interest in a partnership is indeed a type of “share” (like a stock market share) and hence taxable. The tribunal’s order in the case-Buckeye Trust vs PCIT-1 Banga- lore (ITA No.1051/Bang/2024)-cited similar past judgments from the Supreme Court and high courts. Interestingly, the judgments quoted do not exist.