The case involved the legality of assessment u/s 153A vs. 153C...

The case involved the legality of assessment u/s 153A vs. 153C based on materials found during a search of a third party. It was held that assessment u/s 153A cannot be based on materials found during a third-party search; instead, proceedings must be initiated u/s 153C with proper satisfaction recorded by the assessing officers of both parties. Without this satisfaction, no additions can be made. The High Court ruled that additions based on statements from a third party are impermissible u/s 153A. The assessment was deemed bad-in-law due to these procedural lapses. Regarding the addition of undisclosed income, the CIT(A) found factual discrepancies and lack of corroborative evidence, leading to the dismissal of the revenue's appeal.

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