N.L. KALRA, A.M.: ORDER assessee has filed appeal against order of learned CIT(A)-II, Bangalore, dt. 22nd July, 2002. 1.1 assessee has raised following grounds : "(i) order of CIT(A) in enhancing undisclosed income as computed by AO at Rs. 1,00,00,000 by Rs. 7,06,088 is opposed to law and facts. (ii) Both AO and CIT(A) erred in treating undisclosed turnover of Rs. 1,07,06,088 as income of assessee; only net profits arising out of this turnover requires to be estimated vide State of UP vs. Yashpal Singh (1967) 63 ITR 216 (SC) and Hotel Kiran vs. Asstt. CIT (2002) 77 TTJ (Pune) 87 : (2002) 82 ITD 453 (Pune). (iii) Both AO and CIT(A) erred in not considering fact that assessee had to provide to customers peripheral services such as preparing of floor and counter top with tile, electrical wiring and switches, plumbing, piping and fixing, light fitting, painting of wall and ceiling, supplying and fixing of granite etc., etc. (iv) Both AO and CIT(A) erred in not accepting average gross profit ratio of 30 per cent and net profit ratio of 9 per cent in respect of undisclosed turnover of assessee. (v) Both AO and CIT(A) erred in holding that statement under s. 132(4) i s always binding which is recorded under mental stress, without help of accounts relating to 3 assessment years in block period vide Addl. ITO vs. T Muddaveerappa & Sons (1993) 45 ITD 12 (Bang). (vi) CIT(A) erred in enhancing undisclosed income to Rs. 7,06,088 as AO himself had after considering all material on record had estimated undisclosed income at Rs. 1 crore only. (vii) Both AO and CIT(A) erred in holding that assessee had disclosed unaccounted "income" at half turnover of Rs. 2,14,12,715 as unaccounted income. assessee in his statement dt. 22nd Jan., 1999 had mentioned only Rs. 107 lakhs as undisclosed "turnover" as "income" out of Rs. 2,14,12,715 relating to peripheral works. (viii) Both AO and CIT(A) erred without having supporting evidence in search, for estimating turnover as income at Rs. 1,00,00,000 by AO and at Rs. 1,07,06,088 by CIT(A). AO and CIT(A) ought to have treated turnover of Rs. 2,14,12,715 relating to peripheral job works done by carpenters, plumbing works etc. AO ought to have accepted income of Rs. 68,51,696 disclosed by assessee on turnover on Rs. 1,07,06,088 which is based on normal profit in this type of business. (ix) Both AO and CIT(A) erred in not giving any comparative cases in support of estimate of income at 50 per cent of peripheral turnover amounting to Rs. 2,14,12,715 vide K Balaiah vs. CIT (1965) 56 ITR 182 (Mys) (x) For these and any other grounds that may be urged at time of hearing addition of Rs. 1 crore made by AO and enhanced by CIT(A) to Rs. 1,07,06,088 requires to be deleted. 2. As result of search operations, notice under s. 158BC was issued and assessee filed return showing undisclosed income of Rs. 68,51,696. assessee company is engaged in installing kitchen cabinets, other related gadgets like dishwasher, electronic chimneys etc. imported from Italy. company also undertakes supply of granites and also installation of gadgets including plumbing, electrical and other civil work. During course of search, floppy disc was found and seized. printout was taken. This contained entries in following five columns : First column SI. No. Second Column Clients name Third Column Total contract value Amount received in Fourth Column cheque Amount received in Fifth column cash total of entire transactions is as under : Total contract value Rs. 7,03,58,504.56 Amount received in cheque Rs. 3,58,10,012.13 Amount received in cash Rs. 3,45,58,492.43 Amounts received through cheque have been duly accounted. Cash receipts are not fully accounted. accounts were reconciled and in view of explanations submitted and it was finally concluded that cash receipts of Rs. 2,14,12,715 have not been accounted in respect of works completed. Before investigating officer, it was contended that cash expenses are also incurred in respect of work completed for which amounts have been received in cash. assessee is having no vouchers or details in support of such expenses. Verification with some of premises; where kitchens have been installed revealed that assessee had in fact carried out certain civil works. managing director of company vide letter dt. 22nd Jan., 1999 declared Rs. 107 lakhs as undisclosed income for asst. yr. 1996-97 to 1998-99. However, in return of income, assessee admitted undisclosed income as under : Asst. yr. 1997-98 Rs. 8,43,598 Asst. yr. 1998-99 Rs. 60,08,098 Before AO, it was submitted that declaration made before investigating officer was not correct and that it was made to buy peace with Department. It was submitted that contract works for which they received cash payments was of nature of electrical work, plumbing, civil work, tiling etc. In such work, margin of profit cannot be 50 per cent. Vide letter dt. 12th Dec., 2000, assessee made following submissions : investigation wing of Department had assessed total undisclosed turnover of works contract at Rs. 2.14 crores and after estimating expenditure of 50 per cent thereof estimated undisclosed income at Rs. 1.07 crores. We have, in great detail, in our submission to investigation wing of Department explained nature of work involved in said escaped turnover of Rs. 2.14 crores as determined by Department. These being in nature of works contract for work such as plumbing, civil, electrical, painting, tiling etc., there cannot be margin of 50 per cent in value of such contracts. As already explained in our submission to investigating authorities that they had arrived at value of escaped turnover in respect of such works contracts based on document seized during search proceedings, which has also not been supported by any material evidences to indicate there was indeed suppression of such turnover, and therefore income thereon. Thus, assumption of 50 per cent margin in such contracts to us seems very high. Further there were no corresponding findings by investigation wing of Department in terms of unaccounted asset not recorded in books of company. only monetary asset available with company and seized by Department during time of search was Rs. 3,25,000. investigation authorities have also verified expenses relating to said escaped turnover had in fact been recorded in books of company before arriving at allowable expenditure of 50 per cent as estimated. We, therefore, humbly request you to assess for yourself margin of profit in any such similar contracts as discussed above and come to reasonable conclusion on margin of profit, which should be around 8 per cent to 10 per cent. While still reiterating our stand that these contracts were only supervised and carried. Out by us on behalf of customers, to procure orders for our main line of activity i.e. supply and installation of contracts nor expenditure thereon were not accounted for in books. Even though kind of contracts as discussed above do not fetch kind of margins as estimated by investigating authorities and also with view to amicably settle issue with Department we have in good faith offered income of Rs. 68,51,696 as undisclosed income which we believe is reasonable. In this context we would like to inform you that seized cash of Rs. 3,25,000 is also part of declared undisclosed income in our return. Vide letter dt. 25th Dec., 2000, assessee explained that cash receipts were only for following purposes : (a) Preparing of floor and counter top with tiles (b) Electrical wiring and switches (c) Plumbing, piping and fixing (d) Light fitting (e) Painting of wall and ceiling (f) Supplying and fixing of granite It was submitted that statement of expenses incurred for peripheral jobs was submitted to customers. It was argued that profit generally is 10 per cent to 12 per cent in respect of such peripheral jobs executed while assessee has declared undisclosed income of Rs. 68,51,696. AO after considering submissions relied on declaration made b y assessee before investigation wing. It was pointed out that declaration was made on 22nd Jan., 1999 i.e. more than month after commencement of search proceedings i.e. 18th Dec., 1998. declaration was made after considering contract work which was not accounted in books of account. assessee has not maintained complete records and profits cannot be correctly arrived at. It is for assessee to identify investments or expenditure made out of undisclosed income. learned AO relied on following judgments to hold that subsequent retraction is not permissible : (a) Narayana Bhagavanthrao Gosavi Balawaba vs. Bhopal AIR 1960 SC 100 : Admission is best evidence though not conclusive, decisive unless proved erroneous". (b) AIR 1997 SC 2560 : Customs officials are not police and therefore confession made before them is to be taken accordingly and that principles of natural justice cannot be said to be violated. (c) Manoharlal Kasturchand vs. Asst. CIT (1997) 57 TTJ (Ahd) 639 : (1997) 6 1 ITD 55 (Ahd), Param Anand Builders (P) Ltd. (1996) 56 TTJ (Mumbai) 21 : (1996) 59 ITD 29 (Mumbai) : "for retraction of statement assessee should prove threat or coercion." (d) V. Kunhambu & Sons vs. CIT (1996) 131 CTR (Ker) 396 : (1996) 219 ITR 235 (Ker) : "Assessment on basis of voluntary statement is valid". AO accepted undisclosed income for asst. yr. 1997-98 and 1998- 99 as declared by assessee and determined undisclosed income for asst. yr. 1999-2000 at Rs. 31,48,304. Total undisclosed income was estimated at Rs. 1 crore. Before learned CIT(A), following contentions were raised : (a) average gross profit rate and net profit rate for asst. yr. 1996-97 to 1998-99 works to around 30 per cent and 9 per cent respectively. (b) It is not at all stated in their letter dt. 22nd Jan,. 1999 that turnover of Rs. 2.14 crores is undisclosed income and what is stated is that same represents unrecorded works executed. So undisclosed income may be worked out at 10 per cent of Rs. 2.14 crores. (c) Once assessee denies any statement or declaration made under s. 132(4) due to coercion or mental pressure he is entitled to retract same. learned CIT(A) has reproduced relevant extract from letter of assessee dt. 22nd Jan., 1999 in which offer of surrendering undisclosed income of Rs. 1.07 crore was made. It was mentioned that such letter may be taken as declaration for purpose of proceedings before investigation wing. Hence net profit rate as disclosed in declaration is to be applied. Hence learned CIT(A) was of view that undisclosed income to be assessed should be Rs. 1,07,06,088 and hence issued notice for enhancement of income. In response to this notice, assessee submitted as under : (a) Statement under s. 132(4) is for collecting information and cannot be basis for assessment, [Pushkar Narayan Saraf vs. CIT (1990) 86 CTR (All) 110 : (1990) 183 ITR 388 (All) Addl. ITO vs. T. Muddaveerappa & Sons (1993) 45 ITD 12 (Bang)] (b) Provisions of s. 145 to be applied for estimating net income of assessee. (c) CIT(A) cannot enhance income relating to item which has not been considered by AO. learned CIT(A) relied on decision of jurisdictional High Court in case of CIT vs. P.R. Metrani (HUF) (2001) 169 CTR (Kar) 169 in which it is held that presumption under s. 132(4A) is not restricted to 132(5). On basis of declaration, learned CIT(A) held that undisclosed income is Rs. 1,07,06,088 as against Rs. 1 crore determined by AO. Income was thus enhanced by Rs. 7,06,088. 3 . During course of proceedings before us, learned Authorised Representative drew our attention to letter dt. 22nd Jan., 1999 filed before AO. As per this letter, it was submitted that main business of assessee company was to import and supply kitchens. For this purpose, assessee was required to suggest other work like plumbing, altering electrical wiring, false ceiling, wood work etc. so that kitchen can be installed in existing premises. Such work was undertaken at instance of customer as assessee was interested to get execution of main work for customer. cash component towards supply of kitchen has been accounted in books. intention of preparing statement as found during course of search was to arrive at estimated value of additional work done at client s premises. Such additional work has not been executed on turnkey basis. During course of search, it was stated that estimated expenditure is around 50 per cent to 60 per cent on additional work. estimate was always made on higher side to cover any calculation error. assessee is not in position to provide material evidence for actual amount spent but looking to nature of work, margin of profit will be 8 to 10 per cent. Before us, learned Authorised Representative filed chart showing profit of 32 per cent for asst. yr. 1998-99. learned Authorised Representative submitted that assessee has shown gross profit of 32 per cent on such additional work while filing return showing undisclosed income. learned Authorised Representative submitted that statement recorded i s not statement under s. 132(4) as it has not been established that statement was recorded during course of search. Vide statement dt. 27th Jan., 1999, assessee accepted that it has filed declaration through managing director vide letter dt. 22nd Jan., 1999 for agreeing to quantum of undisclosed income at 50 per cent of Rs. 2,14,12,775 i.e. Rs. 1,07,06,088. Such statement has not been established to have been made during course of search. Hence such statement cannot be termed as statement under s. 132(4) of IT Act. learned Authorised Representative drew our attention to decision of Calcutta High Court in case of CIT vs. Ashim Krishna Mondal (2004) 192 CTR (Cal) 336 : (2004) 270 ITR 160 (Cal). undisclosed income is to be computed. There is difference between computation and assessment. Computation is calculation. Hence for purpose of computation, there is some data and material available. appellant has shown undisclosed income on basis of gross profit. Hence, AO was not supposed to make estimation. No basis has been provided by AO. learned Authorised Representative strongly argued that cash payments have been received for additional work. Looking to nature of additional work executed, no prudent man will believe that such additional work will fetch net profit of 50 per cent. Hence, it was argued that income disclosed vide letter be ignored and undisclosed income as shown in return be accepted. 4 . On other hand, learned Departmental Representative drew our attention to p. 18 of paper book filed. In answer to question No.18, it was replied that cash receipts were not intended to be entered in books of account. Thereafter, learned Departmental Representative drew our attention to question Nos. 21 and 22 appearing at p. 19 of paper book. Cash receipts were admitted to be not reflected. It was argued that assessee has not established that entire cash receipts are in respect of additional work only. It was pointed out that assessee himself vide letter dt. 22nd Jan., 1999 admitted undisclosed income. assessee has no evidence or vouchers to support claim of expenses. expenses have been allowed to extent of 50 per cent on basis of statement made by assessee. It is not case that entire unaccounted receipts in cash represented receipts corresponding to additional work. Moreover, gross profit of 32 per cent in regular business cannot be applied to compute undisclosed income on turnover not disclosed. 5. We have heard both parties. Search under s. 132 was conducted on 18th Dec., 1998. In statement, managing director of company Shri Ravi Karumbiah stated that he has to find out from accounts as to whether all cash receipts are accounted. paper showing following narration was shown : Karthick (SACFM) Rs. 50,000 16-12-1998 Payment 70% Cash Cheque 30% Iftekar (Mohd. Ebrahim) Rs. 1,00,000 16-12-1998 Managing director of company stated that paper is in handwriting of executive director. amounts received in cash was in respect of said parties for material to be supplied to them. Such cash receipts were not found noted in cash book. It was stated that these cash receipts were for buying raw material from market. Cash received is recorded partywise and part of cash received is entered subsequently in books of account. In answer to question No. 18, managing director admitted that in respect of seven parties, receipts are entered in computer printout. However, amounts written in respect of following is in handwriting : Kalpara Valh 1,28,895 1,54,276.80 Brijunath Cash Cash 1,00,000 1,00,000.00 received Tax Tax at at 10.5 per 28,895 54,276.80 10.5 per cent cent 31,929 59,975.80 T&A 8,500 T&A 8,500.00 Due 40,429 Due 68,475.80 Managing director of company stated that handwriting is of director of M/s C C Exim (P) Ltd. Amounts have been written as per directions of managing director. This paper shows correct picture. Such cash receipts were not intended to be entered in books of account. We would like to reproduce question Nos. 19 to 22. Q. No.19 : I would like to refresh your memory that I picked up this paper in torn condition from your dustbin. Why did you tear this and thrown in dustbin while no record of these entries have been kept. Ans. : As I already informed parties regarding account, I did not need to keep this. Q. No. 20 : So you mean to state that account was settled to extent indicated by pencil writing in sheet under reference ? Ans. : Yes Q. No. 21 : Do you acknowledge that neither in books of accounts nor in any record of your office cash receipts have been shown (indicated under sheet). Ans. : Yes, I acknowledge that these cash receipts are not shown in books of account or any other record of this office. Q. No. 22 : In how many cases such transactions outside book have taken place ? Ans. : On average of 30 per cent of cases, this has taken place as clients insist on paying by cash outside books constraining us to incur some expenditure outside book. computer printout was taken and that showed cash payments. Some of cash payments were accounted. In respect of cash payments not accounted, managing director of company in answer to question No. 8 in statement dt. 29th Dec., 1998 stated that they have to incur cash expenses outside books of account in respect of site preparation, electrical work inside kitchen, plumbing, some civil work like flooring and false ceiling. Such expenses may be to tune of 50 per cent to 60 per cent expenditure cannot be supported by any documentary evidence. Vide statement dt. 27th Jan., 1999, managing director of company voluntarily declared 50 per cent of cash receipts as undisclosed income. Such unaccounted cash receipts were of Rs. 2,14,12,175. assessee vide letter dt. 11th Jan., 1999 submitted that entries in second column do not represent amounts received through cheque. Advance received through cash is also entered in fourth column. Hence, entries in fourth column do not represent amounts received by cheque only and also include cash. In respect of Raghavender Rao, amount entered in col. 3 is Rs. 9,50,776 and he has been billed for Rs. 6,00,000. It is stated that balance is for additional work. In respect of Raju Sachdev, amount in third column is Rs. 3,74,140 and he has been billed for Rs. 1,50,000. AO has verified that appellant has done some additional work. assessee company vide letter dt. 22nd Jan., 1999 submitted as under : "As already explained in few cases, additional work was executed for enabling us to promote our prime business of supply/installation and commissioning of kitchens, without any profit element. We do not intend to litigate with Department, on this matter and to avoid all further proceedings on issue we are willing to offer 50 per cent of sum of Rs. 2.14 crores determined by you as undisclosed turnover in respect of additional works executed, which amounts to Rs. 1.07 crores (i.e. 50 per cent on Rs. 2.14 crores) which could be taken as our declaration for purpose of these proceedings subject to granting immunity from penalty and prosecution and waiver of interest. We are making this offer of Rs. 1.07 crores solely on condition that all seized material in your possession have been considered and there would b e no scope for Department to further proceed in this matter for further additions. This offer is made purely for purpose of buying peace with Department besides indicating our willingness to co-operate in every respect for concluding search proceedings expeditiously. We shall on above condition, if accepted, by Department shall honour our commitment in filing return of income and pay taxes thereon". If sales are understated in books of account by not disclosing exact amount of sale in respect of item then entire unrecorded sales turnover is income as corresponding purchases are debited. However, if sales are made outside books of account by making purchases outside books of account, then profit earned from such turnover is to be added as income. In case of assessee, there is no material to show that unaccounted cash receipts were only in respect of additional work executed. During course of search, certain papers in torn condition represented cash receipts. It was admitted that these receipts are not available in any record. There are entries upto sl. No. 257 in computer printout. assessee vide letter dt. 11th Jan., 1999 gave details of 302 entries. receipts in respect of Kalpana Brijunath found in paper recovered from dustbin is not available in printout taken from computer. assessee vide letter dt. 11th Jan., 1999 has included same as billed in financial year 1998-99 and entered this name at sl. No. 289 of list with letter dt. 11th Jan., 1999. During course of search, it was admitted that this is not recorded. cash receipts as found in printout from computer is only for financial year 1997-98 and 1998-99 while assessee company started its business in 1994. assessee has made declaration vide letter dt. 22nd Jan., 1999 and such letter is not alleged to have been obtained under threat or coercion. This was voluntary declaration. assessee estopped Department for making further investigation. In case assessee felt that such declaration was not correct then it was having sufficient time to say that declaration be not accepted. facts of receipt of unaccounted cash was in exclusive knowledge of directors and they were aware of expenses, if any, incurred. During course of proceedings, assessee has not made any attempt to corelate unaccounted cash receipts from particular client vis-a- vis additional work done to establish that profit margin is not 50 per cent. There is no evidence to suggest that unaccounted cash receipts were only for additional work. Perusal of printout available at pp. 1 to 6 of paper book filed by learned Departmental Representative shows that it has been signed by witnesses on 29th Dec., 1998. It means that search continued upto 29th Dec., 1998. Statement of Shri Ravi Karumbaiah has been recorded on 29th Dec., 1998 under s. 132(4) of IT Act. This is statement on oath. In answer to question No. 8, managing director of company stated that cash expenses, which are not recorded in books, may be to tune of 50 to 60 per cent. It means that cash receipts not accounted in books to extent of 40 per cent to 50 per cent represent undisclosed income. gross profit disclosed for financial year 1997-98 is 45 per cent. This also indicates that profit margin as mentioned in statement is not without any basis. managing director of company vide letter dt. 22nd Jan., 1999 and addressed to Dy. Director of IT (Inv.) offered sum of Rs. 1.07 crore as undisclosed income. Such letter has been filed during post-search enquiries conducted by Investigation Wing of Department. Such letter is voluntary and there is no plea that such letter was obtained under threat or coercion. In view of such letter, onus was on assessee to establish that offer was under any misconception of facts. In letter itself, it has been mentioned that assessee is not in position to provide material evidence for actual assessee is not in position to provide material evidence for actual amount spent by clients either through them or themselves. It is also mentioned that margin of profit in executing additional work is generally 8 to 10 per cent. managing director of company was fully aware of facts at time of filing declaration. It cannot be said that declaration was under any misconception of facts. appellant company has failed to discharge onus that declaration was under any misconception of facts. learned Calcutta High Court in case of Mriganka Mohan Sur vs. CIT (1979) 120 ITR 529 (Cal) had occasion to consider applicability of strict rules of evidence in income-tax proceedings. In this case, AO found that proprietor of Oriental Traders was having bank account and such account was operated by person having same name as assessee. assessee denied that he had no connection with Oriental Traders. In view of denial by assessee, first appellate authority held that AO had no positive material or conclusive evidence to hold that business of Oriental Traders was carried on b y assessee. Tribunal held that mere denial by assessee was not sufficient to rebut following circumstantial evidences to hold that business of Oriental Traders did not belong to him. bank records showed that person having same name as assessee had operated bank account as proprietor of Oriental Traders. premises of Oriental Traders was partially owned by assessee. There was no other person having same name as that of assessee in premises of Oriental Traders. assessee, established constituent of bank and related to persons in management of bank had other accounts in his own name and in respect of his other business concerns. It was inconceivable that stranger would operate account of Oriental Traders in name of assessee. two other admitted accounts of assessee in bank had not been disclosed in original assessment. learned High Court upheld finding of Tribunal as it cannot be said that conclusions arrived at by Tribunal was based on no evidence or material or perverse in sense that no reasonable man could come to such conclusion on such material. While upholding finding of Tribunal, learned High Court quoted observations of Danckwerts J in Rosette Franks (King Street) Ltd. vs. Dick (1955) 36 Tax Cases 100 (Ch. D) vide which learned Judge observed that "conclusions of arriving at occurrence of similar incident on basis of only one incident is reasonable". In instant case, business was commenced from 1994 but only profit from unaccounted cash receipts for financial years 1997-98 and 1998-99 have been shown in return filed for block period. surrender of 50 per cent of such unaccounted receipts for these two financial years during course of post-search enquiries was to end litigation and to stop further enquiries. learned Authorised Representative has stated that undisclosed income determined by learned CIT(A) is without any basis. undisclosed income is determined on basis of letter filed by assessee. It is not pure estimation but it is computation of undisclosed income. worthy Supreme Court in case of CIT vs. Orissa Corporation (P) Ltd. (1986) 52 CTR (SC) 138 : (1986) 159 ITR 78 (SC) held that if conclusion is based on some evidence on which conclusion could be arrived, then no question of law arises. learned Kerala High Court in case of V. Kunhambu &. Sons vs. CIT (1996) 131 CTR (Ker) 396 : (1996) 219 ITR 235 (Ker) had occasion to consider inclusion of excess stock in assessment proceedings on basis of voluntary statement of partner recorded under s. 132(4) of IT Act. In this case, managing partner of firm made statement to following effect : "He was not keeping day-to-day inventories and due to this, stock entered in accounts are much less than actual stock. value of difference in stock will come to Rs. 3 lakhs and that he is willing to have this amount being brought to tax one half during asst. yr. 1980-81 and other half during asst. yr. 1981-82." learned High Court observed at p. 241 : "The authorized officer had power to record statements on oath on all matters pertaining to suppressed income. statement cannot be confined only to books of account. If partner of firm came forward to disclose about non-entry of excess stock in registers during course of search, there is no reason why ITO shall not make use of it even though there is no actual verification of stock." In Ramesh Chandra & Co. vs. CIT (1987) 168 ITR 375 (Bom), Bombay High Court observed that where assessee has made statement of facts, he can have no grievance if taxing authority taxes him in accordance with that statement. In instant case, declaration was given to Dy. Director of IT (Inv.) and subsequently appellant has not taken any steps to rectify such declaration before authorities before whom such declaration was filed. We are also aware of observation made by Tribunal, Ahmedabad Bench in case of Asstt. CIT vs. Mrs. Sushiladevi S. Agrawal (1994) 49 TTJ (Ahd) 663 : (1994) 50 ITD 524 (Ahd). learned Bench observed : "All that is stated by any deponent on search day should not be taken s truth, whole truth and nothing but truth. Such statements indubitably have evidentiary value and credibility in law, but same should be viewed with great caution, particularly when same is denied, varied or retracted or established by defendant to have been obtained or given under mental stress, coercion, undue influence or due to any other abnormal condition and circumstances when such statement was given. If person at later stage retracts from statement given on search day, then Court or Tribunal should try to ascertain reasons or circumstances from such person for doing so and if satisfied, not to place heavy reliance on such earlier statement which has subsequently been denied and retracted." In instant case declaration is vide letter dt. 22nd Jan., 1999 i.e. it is not on day when search was commenced. only reason given for not showing such undisclosed income is that for additional civil work, margin of profit is only 8 to 10 per cent. Such fact was known to appellant and is mentioned in letter. Hence, no valid reason is given for retraction of statement. learned Ahmedabad Bench in case of Dy. CIT vs. Bhogilal Moolchand (2005) 98 TTJ (Ahd) 108 : (2005) 96 ITD 344 (Ahd) held that statement given under s. 132(4) is not conclusive and person can retract under certain circumstances. However, time gap between statement and retraction of statement is one of important points to be taken into account to decide as to whether statement was given under mistaken belief of either fact or law. However when assessee retracted statement made under s. 132(4) after three and half months of disclosure and there was not iota of evidence to support retraction then AO was justified in not accepting assessee s retraction. In instant case, assessee has not retracted disclosure before Dy. Director of IT but has not included undisclosed income while filing return on 13th April, 1999. Disclosure was admitted vide letter dt. 22nd Jan., 1999. Thus, t h e time gap is too large and hence learned CIT(A) was justified in determining undisclosed income on basis of letter filed by assessee. learned Tribunal, Mumbai Bench in case of Hiralal Maganlal & Co. vs. Dy. CIT (2005) 97 TTJ (Mumbai) 377 : (2005) 96 ITD 113 (Mumbai) on identical facts held that retraction of statement not based on evidence is not to be acted upon. In that case, partner of firm offered additional income based on stock entries made on paper to buy peace and subsequently retracted from same that such stock was not found. Tribunal held that assessee could not deny later on truth or correctness of declaration made at time of search when Departmental authorities accepted such declaration and did not proceed with further investigation. It was held that s. 115 of Evidence Act is applicable. underlying philosophy behind principle contained in s. 115 of Evidence Act is that justice prevails over truth. In case before Mumbai Bench, excess stock as found recorded on paper was neither found nor attempts were made to find after declaration was made. During course of proceedings, learned Authorised Representative pointed out that Revenue has not been able to establish that assets or expenses corresponding to undisclosed income have been found during search. corresponding to undisclosed income have been found during search. appellant has shown undisclosed income to extent of around Rs. 68 lakhs and has not explained as to where such amounts stood invested. It is not case of appellant that undisclosed income has been returned on basis of assets or expenses not recorded in books of account. appellant himself filed declaration of undisclosed income of Rs. 1.07 crore. Hence, there was no onus on Revenue to establish that such undisclosed income is in form of assets etc. Sec. 158B(b) defines undisclosed income and such income can be based on entries found in seized records. Keeping in view discussion contained above, it is held that learned CIT(A) was justified in determining undisclosed income to extent of Rs. 1,07,06,088. In result appeal of assessee is dismissed. *** CARPENTERS CLASSICS (EXIM) (P) LTD. v. DEPUTY COMMISSIONER OF INCOME TAX