Search assessment under Section 153C turns on search date, while inadmissible electronic records need independent corroboration.

For a search assessment under Section 153C, the governing regime is determined by the date of initiation of the search under Section 132, not by the later date of notice to the other person; the post-01.04.2021 amendment did not defeat proceedings arising from an earlier search. The challenge to jurisdiction therefore failed. Additions based on seized digital material could not be sustained where the Section 65B certificate was defective and the electronic record lacked admissibility and independent corroboration; on that basis, the addition linked to the pen drive and printouts was deleted. A separate addition founded on a loose third-party voucher, unsupported by the assessee's signature or verification, was also deleted as insufficient in law.

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Issues: (i) Whether the notice issued under Section 153C of the Income-tax Act, 1961 was invalid on the ground that the post-01.04.2021 amendment governed the proceedings because the notice to the other person was issued later; (ii) Whether the additions based on the seized pen drive, its printouts and the third-party voucher were sustainable in the absence of admissible electronic evidence and corroboration.

Issue (i): Whether the notice issued under Section 153C of the Income-tax Act, 1961 was invalid on the ground that the post-01.04.2021 amendment governed the proceedings because the notice to the other person was issued later.

Analysis: The search in the case of the searched person had been initiated on 28.01.2020, and the seized material had been handed over before 01.04.2021. The applicable regime was therefore determined by the date of initiation of search under Section 132, and not by the later date on which notice under Section 153C was issued to the other person. Section 153C was treated as a consequential provision extending the search assessment framework to another person, and the Finance Act, 2021 amendment was held not to apply prospectively to defeat proceedings arising from an earlier search. The interpretation advanced by the assessee was rejected as leading to an unworkable result contrary to legislative intent.

Conclusion: The challenge to jurisdiction under Section 153C failed and was decided against the assessee.

Issue (ii): Whether the additions based on the seized pen drive, its printouts and the third-party voucher were sustainable in the absence of admissible electronic evidence and corroboration.

Analysis: The addition of Rs. 1.55 crore rested substantially on electronic data from the seized pen drive and its printouts. The coordinate bench had already held, in the connected searched-group appeals, that the Section 65B certificate was defective and that the electronic record was inadmissible. Following that binding finding, the addition could not survive merely on the basis of such digital material without independent corroboration. The separate addition of Rs. 55 lakh was founded on a voucher seized from a third party, which did not bear the assessee's signature and was not supported by independent verification. The voucher, being a loose third-party document, was held insufficient by itself to sustain an adverse addition, especially when the assessment record itself indicated that the document referred to receipt by the assessee rather than a payment by him.

Conclusion: The addition of Rs. 1.55 crore was deleted and the addition of Rs. 55 lakh was also deleted, both being held unsustainable in law.

Final Conclusion: The assessee obtained relief on the merits of the additions, while the jurisdictional challenge under Section 153C was rejected; the revenue's appeal failed and the assessee's appeal succeeded only to the extent of deletion of the impugned additions.

Ratio Decidendi: For a search assessment against an "other person" under Section 153C, the governing regime is fixed by the date of initiation of the search under Section 132, and electronic data cannot sustain an addition unless its admissibility is established in compliance with Section 65B and the material is corroborated by reliable independent evidence.

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