Let me give a charitable and slightly less negative interpretation:

It may have looked like the applicant had someone else do the take-home assignment for him.

That said, I imagine that they could have interviewed in a more constructive way that may have been less stressful (e.g., walk us through your thought processes as you completed this take home assignment — most frauds can’t do this convincingly).

The company definitely could have done better. If you have someone hitting a home run on a take home assignment, at that point a no-hire decision better have some very strong justification behind it.