Upon reading the given question, I realized that:
The first reaction is an aldol condensation reaction between the given compound and formaldehyde.
So the product after 1st step is:
Now, the second part has thrown me off. The current ketone has no $\alpha$ hydrogen left. Condensation reactions are out of the question. Cannizzaro reaction can not take place as this is a ketone (and not an aldehyde) also the medium is now acidic. However, I saw one possibility of formation of hemi-acetals. (I did not think about full acetals, as such a structure was not present in the given options to this question)
Which gave me the following product:
However, the answer provided seems to be not this. The given answer is this:
Can someone give a suggestion that where I want wrong and/or how could I reach the answer and also what was wrong in my thinking as well?
This question is taken from the JEE(A)-2016 [Paper - 2]