I.S. VERMA, J.M.: ORDER In this appeal, Revenue has objected to order of CIT(A)-VII, Ahmedabad dt. 4th Aug., 1999 passed for asst. yr. 1994-9 5 wherein learned CIT(A) has deleted addition of Rs. 10 lacs made by AO, after relying on statement of Mr. Kamal V. Shah, partner of assessee recorded under s. 132(4) of Act at time of search conducted on 4th May, 1994. 2 . Revenue has listed as many as 7 grounds in its appeal, but issue involved is only one which relates to addition of Rs. 10 lacs by AO and consequential deletion of same by CIT(A) by observing as under : "3.2 I have considered facts of case, contention of AO in assessment order, arguments of appellant taken in assessment proceedings and appellate proceedings as well as various Courts decisions relied upon by appellant. I am of view that statement of Shri Kamal V. Shah was taken on record based on mere suspicion and accordingly on basis of facts, appellant firm has retracted same. Hence, same cannot be treated as admission of appellant and cannot be treated as material for framing assessment. AO has also not brought on record any cogent material and/or evidence in respect of on-money receipts and also as evident from assessment order, no incriminating records and materials have been identified from seized records for making additions on basis of statements of Shri Kamal V. Shah. Hence no addition can be made on basis of his statement. Therefore, addition of Rs. 10,00,000 made on basis of statement recorded under s. 132(4) of Act is hereby deleted." 3. We have heard parties. 4. brief facts relating to issue and as have been revealed from records are that (i) Search under s. 132(1) of IT Act was carried out in premises of assessee on 4th May, 1994 resulting into seizure of incriminating documents. (ii) Statements of Shri Kamal V. Shah were recorded by authorised officer on 4th May, 1994 and 29th June, 1994 of IT Act. In reply to question Nos. 37 and 38 of statement dt. 4th May, 1994, he stated as under : "Q. No. 37 : Please explain contents of diary marked as Annex. A/9 to Panchnama prepared during course of search. Ans. 37 : In this diary there are two types of figures. amounts written in this diary indicating - (minus) represent expenditure. Whereas amounts written beyond/(oblique) are to be read ignoring oblique. These are amounts given to some persons which is out of my undisclosed income. For example, 200 pertains expenses paid to Ranchhod, 2 5 /00 Kiritbhai means Rs. 2 5 ,000 given to Kritibhai on 27th Jan., 1996 which is not accounted for in our books of accounts. Q. No. 38 : Please submit your explanation on concealed income as stated in reply to Q. No. 37 above ? Ans. 38 : I have already explained in reply to question Nos. 14 and 16 about undisclosed income of Rs. 34,38,000 earned by our firm M/s Adinath Construction. We have earned above unaccounted money as on-money in our schemes Shatrunjay Apartment and Dawa Bazaar. We have taken on- money in our other firm M/s Parmukh Builders amounting to Rs. 10 lacs in our schemes Vrajbhoomi and Rajbhoomi. We have collected Rs. 10 lacs as on- money in hands of M/s Suhani Builders in our schemes Devbhoomi and Dhasrambhoomi. Out of above on-money we have invested some money in giving cash loans on which we have earned Rs. 62,000 as interest which is also being disclosed as income." (iii) In reply to question No. 39, Shri Kamal V. Shah admitted as under : I wish to disclose my unaccounted income as under : M/s Adinath Construction Rs. 34,38,000 M/s Pramukh Builders Rs. 10,00,000 M/s Suhani Builders Rs. 10,00,000 Interest on loan (concealed) Rs. 62,000 Rs. 55 ,00,000 above Rs. 55 lacs are our undisclosed income which we have invested in following assets : Rs. Investment in ornaments 2 to 2. 5 lacs Rs. Cash 1,30,000 Investment in our scheme for which booking has not been completed although construction work is likely to be Rs. completed 30,00,000 Rs. Rs. Cash receivable 19,00,000 Rs. Household expenses 1, 5 ,000 Year-wise details of undisclosed income shall be submitted later on after verifying books of accounts and seized materials and also I will enhance disclosure if it is found in loose papers and documents on verification. disclosure enhanced later on shall be included under s. 132(4) r/w Expln. 5 to s. 271(1)(c) for purpose of immunity from penalty and prosecution." Another statement of Shri Kamal V. Shah was recorded after gap of almost 3 months on 29th June, 1994. In reply to question No. 7 of statement dt. 29th June, 1994, Shri Kamal V. Shah enhanced disclosure to Rs. 76,00,000 which includes disclosure of Rs. 5 3, 5 ,000 in M/s Adinath Construction. relevant statement is reproduced as under : "Q. No. 7 : Whether you wish to disclose any undisclosed income in view of Expln. 5 to s. 271(1)(c) r/w s. 132(4) ? Ans. I wish to take advantage under this section and I disclose following unaccounted income after consulting partners of firm for asst. yrs. 1994-9 5 and 199 5 -96 : Asst. yr. Undisclosed income 1994-9 5 Rs. 70,00,000 199 5 -96 Rs. 6,00,000 Rs. 76,00,000 above undisclosed income has been earned by our different firms as under : Undisclosed Name of firm Asst. yr. income (1) Suhani Bldrs. 1994-9 5 Rs. 12, 5 ,000 (2) Pramukh Bldrs. 1994-9 5 Rs. 10,00,000 (3) Adinath 1994-9 5 Rs. 47, 5 ,000 Constn. 199 5 - Rs. 6,00,000 96 Total Rs. 76,00,000 above income as shown in different firms earned as on-money from different schemes are invested in different assets as under : Unaccounted income of M/s Suhani Bldrs. has been distributed amongst partners. I have (i) invested my share in gold ornaments and I do not know investments made by other Rs. 12, 5 partners Suhani Builders ,000 (ii) Pramukh Builders Rs. Investment in schemes 10,00,000 Rs. (iii) Adinath Construction 5 3, 5 ,000 Rs. Total 76,00,000 receipts of on-money are recorded mostly in seized diary marked as Annex. A/3 to Panchnama dt. 5 th May, 1994." 5 . assessee has filed its return of income for asst. yr. 1994-9 5 declaring income of Rs. 48,910 on 14th March, 199 5 and in return so filed, assessee did not include income of Rs. 10 lacs surrendered at time of search. 6. AO called upon assessee to explain as to why surrendered income of Rs. 10 lacs has not been disclosed and why same could not be assessed as income on account of on-money . 7. assessee s reply before AO was as under : "(a) income returned under IT Act is not required to be determined on basis of statement recorded under s. 132(4). (b) No evidence of charging of on-money was found during course of search, hence only on basis of statement of assessee on-money earned cannot be taxed. (c) Search party required to exercise statutory powers in conduct of search proceedings whether one calls it exercise of power that he should act reasonably, fairly and bona fide and in consonance with principles of natural justice. (d) As search party could not gather sufficient evidence additional income offered under s. 132(4) is not considered in return of income filed." 8. AO, however, did not accept assessee s explanation and made addition of Rs. 10 lacs after relying on statement of Mr. Kamal V. Shah (assessee s partner) recorded at time of search by observing as under : "3.2 contention of assessee is not acceptable and is incorrect because of following reasons : (i) As referred in para 2 above, Shri Kamal V. Shah stated on oath under s. 132(4) that he was charging on-money in construction project run by Shri Kamal V. Shah and his family members. Shri Kamal V. Shah confessed additional income of Rs. 10 lacs in his statement dt. 4th May, 1994 in reply to question No. 38. (ii) statement of Shri Kamal V. Shah was again recorded on 29th June, 1994 after gap almost two months. But even after this gap, he again confirmed statement made under s. 132(4) and in reply to question No. 3 he again confirmed disclosure of additional amount on account of on-money earned by him. (iii) statement of Shri Kamal V. Shah dt. 29th June, 1994 was endorsed and signed by all partners and statement was given after consultation amongst all partners. Panchnama prepared during course of search clearly indicates that statement recorded under s. 132(4) was recorded in presence of panchas and also without any coercion, threat and undue influence. Even assessee has not objected to bona fides of statement recorded by authorised officer. bona fide of statement recorded under s. 132(4) has not been challenged by Authorised Representative during course of search and after search. Mere excuse and argument placed by representative is that Department could not get any documents in writing regarding collection of cash money over and above cheque receipts. (iv) statement of Shri Kamal V. Shah was not only one statement recorded during course of search, but statements of other persons viz. Shri Harshad F. Patel and Shri Kantilal N. Patel and nowhere bona fides of recording statement by authorised officer was challenged. Even in other case of group such as Shri Harshad F. Patel and his partnership concerns, returns have been filed in view of statement and there is nothing on record to disbelieve bona fides of statement and comments in notes enclosed along with statement of income appears to be casual and general as same notes were enclosed by auditors M/s Dhiren Shah & Co., chartered accountants, in case of Shri Harshad F. Patel and also in cases of M/s Patel Cement Products and M/s Gujarat Construction wherein additional income was shown in accordance with statement. 3.3 In view of above discussion, submission of assessee is totally incorrect, misleading and afterthought. Therefore same do not deserve for any consideration and assessment order is being completed considering facts and figures arising out of search action." 9 . assessee went in appeal before CIT(A) and pleaded that Revenue having not found any evidence at time of search, either in form of documents or in form of assets with respect to alleged undisclosed income of Rs. 10 lacs, addition made on basis of statement recorded under s. 132(4) of Act alone was not justified. learned CIT(A) deleted addition as per his observations contained in para No. 3.2 and we have reproduced same as under : "3.2 I have considered facts of case, contention of AO in assessment order, arguments of appellant taken in assessment proceedings and appellate proceedings as well as various Courts decisions relied upon by appellant. I am of view that statement of Shri Kamal V. Shah was taken on record based on mere suspicion and accordingly on basis of facts, appellant firm has retracted same. Hence, same cannot be treated as admission of appellant and cannot be treated as material for framing assessment. AO has also not brought on record any cogent material and/or evidence in respect of on-money receipts and also as evident from assessment order, no incriminating records and materials have been identified from seized records for making additions on basis of statements of Shri Kamal V. Shah. Hence no addition can be made on basis of his statement. Therefore, addition of Rs. 10,00,000 made on basis of statement recorded under s. 132(4) of Act is hereby deleted." 1 0 . It was, in view of above facts and circumstances of case, learned Departmental Representative supported order of AO by pointing out that assessee s partner, Mr. Kamal V. Shah had not only admitted income of Rs. 10 lacs in statement recorded under s. 132(4) of Act on 4th May, 1994, but had again, admitted income o f Rs. 10 lacs to have been earned by assessee firm in his statement recorded on 29th June, 1994 as per answers to question Nos. 37, 38 and 39 in statement which have been duly taken care of by AO. He, therefore, submitted that CIT(A) was not justified in deleting addition. 11. learned counsel for assessee, first of all, supported order of CIT(A) by re-submitting Revenue having not found any material during search nor thereafter to show that assessee had earned any income of Rs. 10 lacs (outside books of account) and also having not found any unexplained asset during course of search, addition made only on basis of statements recorded under s. 132(4) at time of search or thereafter could not be sustained in law and, therefore, CIT(A) was quite justified in deleting addition. assessee s counsel, further, submitted that as is evident from statement recorded in assessment order, assessee s partner, Mr. Kamal V. Shah has stated to have disclosed income of Rs. 5 3, 5 ,000 in hands of Adinath Construction and income of Rs. 12, 5 ,000 in hands of M/s Suhani Builders in addition to income of Rs. 10 lacs in assessee s hands, but in case of M/s Adinath Construction, firm had not added any disclosed income in return of income on ground that interpretation of contents of documents found relating to that firm, did not reveal any unaccounted income. According to counsel for assessee, AO, after going through documents relating to M/s Adinath Construction (group company) and searched simultaneously along with assessee had computed on- money from scheme known as Shatrunjay Apartment and Deva Bazaar at Rs. 27,46,664 and Rs. 44 lacs respectively. But on appeal, by assessee, CIT(A) had sustained only income equal to 1 5 per cent of total on-money appearing in documents and not as computed by AO. learned counsel, further, submitted that order of CIT(A) in case of M/s Adinath Construction, Ahmedabad for asst. yrs. 1994-9 5 and 199 5 -96 were upheld by Tribunal, Ahmedabad Bench "C" in assessee s and Revenue s cross- appeals in ITA Nos. 197 5 and 1976/Ahd/1999 and in ITA Nos. 2167 and 2168/Ahd/1999 respectively as per its order dt. 21st Oct., 200 5 . In other words, according to learned counsel for assessee, addition on account of on- money , if at all any is to be sustained, it cannot be more than 1 5 per cent of total on-money of Rs. 10 lacs; meaning thereby that if order of CIT(A) is reversed, then addition can be upheld only to extent of Rs. 1, 5 ,000, i.e. 1 5 per cent of Rs. 10 lacs. 1 2 . After careful consideration of rival submissions, facts and circumstances of case and decision of Tribunal in case of M/s Adinath Construction (group company) and provisions relating to admissibility of admission made in statement under s. 132(4) of Act as well as retraction of same thereafter, we are of opinion that though assessee has option to retract statement recorded under s. 132(4) or under s. 131(1) of Act, but retraction is acceptable only if it is substantiated by plausible evidence or material that admission made in statement under s. 132(4) or 131(1) of Act cannot be sustained either in law or in facts. 1 3 . So far as present case is concerned, there is no dispute that assessee s partner, Mr. Kamal V. Shah had admitted income of Rs. 10 lacs claimed to have been earned by assessee firm outside books of account, both in statements recorded under s. 132(4) as well as s. 131(1) of IT Act, 1961, but Revenue having not found either any material or any asset, which could be correlated to alleged undisclosed income, assessee was quite justified in retracting his disclosure statements. 14. Coming to findings of CIT(A) contained in para No. 3.2 of his order, which has been duly reproduced by us in para No. 8 (supra), we are of opinion that CIT(A) deleted addition after making specific finding to effect that "I am of view that statement of Shri Kamal V. Shah was taken on record based on mere suspicion and accordingly on basis of facts, appellant firm has retracted same." 14.1 learned CIT(A) has, therefore, treated assessee s statement as not admission by specific observation which reads as "hence, same cannot be treated as admission of appellant and cannot be treated as material for framing assessment." 14.2 learned CIT(A) has, further, supported his findings by another specific finding of fact to effect that "the AO has also not brought on record any cogent material and/or evidence in respect of on-money receipts and also as evident from assessment order, no incriminating records and materials have been identified from seized records for making additions on basis of statements of Shri Kamal V. Shah." 14.3 Since aforesaid findings of CIT(A), specially finding that "the AO has also not brought on record any cogent material and or evidence in respect of on-money receipts and also as evident from assessment order, no incriminating records and materials have been identified from seized records for making additions..." are on appreciation of facts and Revenue has not disputed correctness of this finding during course of hearing of appeal before us, we are inclined to agree with findings of CIT(A) that "so far as present assessee is concerned, Revenue had not found any material during course of search which could support either assessee s disclosure or Revenue s presumption/assumption for making addition" and, therefore, order of CIT(A) requires no interference; meaning thereby that addition on basis of statement under s. 132(4)/131 of Act, etc. which later on retracted by assessee and in absence of any material found during search, in support of justification of addition, cannot be upheld. 1 5 . aforesaid decision of ours is further supported by decision of Tribunal, Ahmedabad Bench B in case of Asstt. CIT vs. Jorawar Singh M. Rathod (200 5 ) 94 TTJ (Ahd) 867 and in case of Asstt. CIT vs. Hastimal K. Bhansali for asst. yr. 1994-9 5 ITA 348/A/1998 dt. 22nd Aug., 200 5 , wherein Tribunal deleted addition having been made in view of similar facts and circumstances as are of case before us. relevant part of order of Tribunal reads as under : "6. We have heard learned representatives of parties and perused record. After considering facts of case, we find that AO had made addition merely on basis of statement recorded under s. 132(4) at time of search. We find that at time of search no evidence or material or assets, immovable or movable properties were found which supports disclosure of Rs. 16 lakhs. assessee had retracted said disclosure which has not been accepted by Department. It is true that simple denial cannot be considered as denial in eyes of law but on same time it is also to be seen material and valuable and other assets found at time of search. evidence ought to have been collected by Revenue during search in support of disclosure statement. decision cited by learned Departmental Representative is distinguishable on facts. In said case disclosure was of Rs. 7 lakhs which was supported by investment in house property, unaccounted cash, unaccounted investment in furniture and unaccounted in gold ornaments etc. whereas in case under consideration no such assets or valuables were supported to disclosure. It is settled position of law that authorities under Act are under obligation to act in accordance with law. Tax can be collected only as provided under Act. If assessee, under mistake, misconception or on not being properly instructed, is overassessed, authorities under Act are required to assist him and ensure that only legitimate taxes due are collected [S.R. Koshti vs. CIT (200 5 ) 193 CTR 5 18 (Guj)]. ITO is not entitled to make pure guess and make assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support assessment or addition. [Dhakeswari Cotton Mills Ltd. vs. CIT (19 5 4) 26 ITR 77 5 (SC)]. It is true that apparent statement must be considered real until it was shown that there were reasons to believe that apparent was not real. Science has not yet invented any instrument to test reliability of evidence placed before Court or Tribunal. Therefore, Courts and Tribunals have to judge evidence before them by applying test of human probabilities [CIT vs. Durga Prasad More 1973 CTR (SC) 5: (1971) 82 ITR 5 40 (SC)]. In light of above discussion we apply ratio of apex Court in case of Durga Prasad i.e. test of human probabilities, we do not find any material on record on which basis it can be said that disclosure of assessee for Rs. 16 lakhs is in accordance with law and in spirit of s. 132(4). Under circumstances, we find that CIT(A) has correctly deleted addition." 1 5 .2 In case of Hastimal K. Bhansali, both of us were parties and had confirmed order of CIT(A) deleting similar addition and under similar facts and circumstances. 1 5 .3 Respectfully following aforesaid decision of Co-ordinate Bench, we uphold order of CIT(A). 16.1 So far as decision in case of Adinath Construction is concerned, we are of opinion that facts of case were quite different from facts of present case so much so that in case of Adinath Construction, Revenue had found diary marked as Annex. A-3 during course of search proceedings in which there were details relating to receipt of on-money . Not only this, in that case, assessee itself had accepted receipt of Rs. 14,22,000, out of receipts recorded in document, as having been received and had duly accounted for same in supplementary balance sheet. In other words, Revenue as well as assessee had proceeded on basis of seized documentary evidence marked as Annex. A-3. It was, therefore, in view of this evident found during search that Tribunal confirmed order of CIT(A) sustaining addition equal to 1 5 per cent of receipts admitted by assessee. 16.2 So far as present case is concerned, neither AO has referred to any such material/evidence/document found during search, for making addition on account of on-money nor learned Departmental Representative referred to any such material during course of hearing present appeal before us. Revenue s case throughout proceedings, i.e. from assessment stage to hearing of appeal before us has been only reliance on statements of Mr. Kamal V. Shah, wherein income of Rs. 10 lacs was disclosed. 1 7 . In view of above facts, we are unable to agree with learned Departmental Representative that in any case, addition to extent of 1 5 per cent of Rs. 10 lacs be sustained. In result, order of CIT(A) is confirmed. 18. In result, appeal of Revenue is dismissed. Sanjay Arora, A.M. : 3rd April, 2006 I have carefully gone through order of my learned Brother. However, I find myself in respectful disagreement with view taken by him and, therefore, proceed to write separate and dissenting order. 2 . facts of case are undisputed and detailed in order of my learned Brother. However, brief recapitulation thereof would enable to discern issue(s) arising out of same for purpose of this appeal, as under : (a) search was conducted out at premises of assessee, partnership firm engaged in construction activity as developer, on 4th May, 1994, resulting in seizure of some incriminating documents; (b) diary, marked as Annex. A-3 (and another marked A-9) to Panchnama dt. 5 th May, 1994 carried details in respect of on-money , in codified form, which stood explained (decodified) by deponent in his statement. Further, both receipts and payments (as negative figures) stood recorded therein, which stood maintained in form of cash book; (c) In his statement, Shri Kamal V. Shah, partner of assessee firm, recorded by AO on 4th May, 1994, and again on 29th June, 1994, under s. 132(4) of IT Act, 1961 ("Act" hereinafter), conceded to have received, among others, on-money amounting to Rs. 10 lakhs in respect of its two schemes, Vrajbhoomi and Rajbhoomi ; (d) Accordingly, amount of Rs. 10 lakhs was disclosed as undisclosed income in hands of assessee as part of total disclosure of Rs. 55 lakhs made in respect of total group, for which break-up of corresponding assets was also given as part of statement itself, and which included Rs. 30 lakhs in building(s) under construction (under various schemes; other two firms also being in construction business), and work on which was stated to be substantially completed (refer question Nos. 37 to 39/4th May, 1994); (e) On 29th June, 2004, total disclosed amount stood enhanced to Rs. 7 6 lakhs, for which, i.e., subsequent enhancement, leave was taken by assessee in his statement under s. 132(4) dt. 4th May, 1994. amount of disclosure for assessee firm, however, remained same, i.e., at Rs. 10 lakhs, and entire amount as disclosed allocated to current year (asst. yr. 1994-9 5 ), save Rs. 6 lakhs in hands of M/s Adinath Construction for asst. yr. 199 5 -96. In respect of assessee firm in asset break-up of enhanced disclosure, amount was, again, declared as investment in schemes ; (f) Both statements were recorded under oath, second statement made after almost two months of first one, in fact, only confirmed former, and was endorsed and signed by all partners, who were stated therein to have been consulted in matter; carried signatures of independent witnesses; and further, carried reference to penalty sparing clause of Expln. ( 5 ) to s. 271(1)(c), as also with regard to having been made without any coercion, threat or undue influence; (g) assessee filed its return of income for year on 14th March, 199 5 at income of Rs. 48,910, i.e., without including impugned sum of Rs. 10 lakhs, on ground that no evidence of charging of on-money was found during course of search and, therefore, addition on basis of statement could not be made. AO added sum on basis of foregoing, and further stating that similar statements made by other persons, i.e., Shri Harshad F. Patel and Shri Kantilal N. Patel, stood acted upon by returning disclosed amount in case of their respective partnership firms, i.e., M/s Patel Cement Products and M/s Gujarat Constructions; (h) In appeal, learned CIT(A) accepted assessee s retraction on basis that statement of Shri K.V. Shah was taken on basis of suspicion and, therefore, in view of various Court decisions, cannot be treated as admission in first place, holding same (retraction) to be made on basis of facts; AO being unable to bring any cogent material/evidence on record in respect of receipt of on-money from seized records. draft order proposed by my learned Brother upholds decision of learned CIT(A) on same basis. 3 . 1 deponent has in statement [under s. 132(4)] declared booking rate for different schemes under progress/operation at relevant time. For Vrajbhoomi Scheme, these are stated to be as varying between Rs. 2,200 to Rs. 2, 5per sq. yd. (question No. 11/4th May, 1994). As per details furnished by assessee in respect of sale of flats under said scheme, average booking rate works to Rs. 2,122 per sq. yd. assessee has effected sales of about 2,640 sq. yds. during year under reference, i.e., under Vrajbhoomi and Rajbhoomi Schemes, and in respect of which disclosure stands made. If this amount (of disclosure) is spread over quantity (area) sold, it works to average rate of Rs. 379 per sq. yd. For Vrajbhoomi Scheme, therefore, it would total to Rs. 2, 5 1 (Rs. 2,122 + Rs. 379), i.e., in terms of disclosed rate. Now, firstly, it is inconceivable, specially in light of diary (material) recording receipt of on-money , that it was not being actually received. Secondly, amount disclosed in respect thereof corroborates booking rates for relevant scheme, i.e., when considered in aggregate, so that veracity of each, in way, stands proved. It is not essential, it may be added, that calculation as made on basis of statement corresponds exactly with rates; figure of Rs. 10 lakhs being itself only approximate and tentative figure, but only fit , which they indeed do. Rather, assessee s contention, submitted by way of alternate plea, that only 1 5 per cent of Rs. 10 lakhs be brought to tax, i.e., as directed in case of M/s Adinath Construction for asst. yrs. 1994-9 5 and 199 5 -96 by Tribunal in cross-appeals (i.e., ITA Nos. 197 5 and 1976/Ahd/1999 and ITA Nos. 2167 and 2168/Ahd/1999 dt. 21st Oct., 200 5 ), and addition in which stood also made on basis of same statement, contradicts assessee s stand, besides proving, by implication, Revenue s stand of impugned statement not having been obtained under duress, and which is also not assessee s case. In view of foregoing, holding of statement as not amounting to admission becomes unsustainable. 3.2 Even otherwise, it is for assessee to establish its case, i.e., of admission being based on incorrect understanding or assumption of facts, and which it has not done. law in matter is crystal clear; onus to establish admission as not true, or based on incorrect or wrong facts, is squarely on assessee, and is heavy, as admission itself constitutes evidence against assessee; so that it could only be discharged on basis of some corroborative, cogent and contemporaneous material/record. No attempt to discharge onus has been made in present case. 3.3 At same time, we also find that Tribunal, on basis of diary, (which pertains to Shatrunjaya and Dawar Bazar Schemes of M/s Adinath Construction, i.e., two of five schemes for which booking rates stand specified in statement), and wherein not only receipts but also expenses/payments stood recorded, after detailed analysis, including of sales (booking) rates for different schemes, and that reflected in books, and operational results that transpire/result under alternative scenarios, came to finding of fact (in ITA Nos. 197 5 and 1076/Ahd/1999 dt. 21st Oct., 200 5 for asst. yr. 1994-9 5 and 199 5 -96 for M/s Adinath Construction) that entire on-money did not represent recipient s income, but only to extent of 1 5 per cent thereof; balance 8 5 per cent being expended on same (project itself), even as, in that case too, disclosure per statement under s. 132(4) stood similarly retracted in full, with no part thereof being returned per its return of income. That being case, it demonstrates that disclosure(s) as made by assessee was on mistaken view on this mixed question of fact and law, i.e., of entire receipt as representing its income liable to tax irrespective of amount of business expenditure incurred therefrom. As such, there is no reason for not adopting same ratio in assessee s case as well; modus operandi of receiving and expending money by management being uniform for different concerns (or not having been shown to be not so); and particularly in view of fact that expenditure in assessee s case stood invested, by its own admission, in construction schemes only. It would not be correct to accept, therefore, one part of diary (material), i.e., of acceptance of on-money , and not other, i.e., of investing same under schemes. No doubt, assessee states entire amount as having been invested in schemes (stock-in-trade), but Tribunal having come to finding of fact that assessee s expenditure thereon is only to extent of 8 5 per cent thereof, and which finding has been accepted by both parties, same is no longer res integra. 3.4 net profit for two schemes upon completion works out to 6.10 per cent and 2. 5 8 per cent, for Vrajbhoomi and Rajbhoomi, respectively. net profit rate, as per assessee, Revenue, and by adopting income of 1 5 per cent as per Tribunal in case of M/s Adinath Construction, worked out with reference to receipt for current year, is as under : Receipt Profit/assessee Revenue ITAT Vrajbhoomi 1921 5 117212 183 5 Rajbhoomi 47343 01 1164 314 Profit 164 555 555 555 37 5 6 47 5 6 5 47 5 Sales 37 5 6 5 1 51 1 651 % Profit 4.38 24.48 6.61 3. 5 contention of absence of corresponding assets as made by assessee, and accepted by learned CIT(A), also get dislodged and becomes unsustainable in view of assessee s own admission of investment of on-money in schemes. In other words, statement not only, thereby, proves acceptance of on-money i.e., qua third party, but also of manner of its disposal, and it is on this basis that it has been able to secure relief in case of M/s Adinath Construction; investment only forming part of its stock-in-trade. 4. As, in view of foregoing, I am not inclined to agree with proposed order of my learned Brother, I feel incumbent to detail my reasons as well as basis of my decision, as under : 4.1 In arriving at his decision, my learned Brother relies on following in confirming impugned order deleting addition in totality : (a) That facts in case of M/s Adinath Construction, where similar disclosure was also made, and which stood confirmed to extent of 1 5 per cent (of gross on-money ), were different inasmuch as seized diary pertained to that firm, and not assessee firm; (b) That no other incriminating material was found with reference to disclosure, including any corresponding assets; and (c) That Department has not been able to substantiate its stand with any cogent material. In doing so, it is stated that order of Tribunal in case of Jorawar Singh M. Rathod (supra) and Hasthimal K. Bhansali (supra) is being followed, wherein Tribunal has endorsed action of first appellate authority following ratio of decisions of Hon ble Supreme Court in case of Dhakeswari Cotton Mills Ltd. vs. CIT (19 5 4) 26 ITR 77 5 (SC) and CIT vs. Durga Prasad More 1973 CTR (SC) 5: (1971) 82 ITR 5 40 (SC). 4.2 In Durga Prasad More (supra), in fact, Supreme Court has clarified that in view of fact that science has not been able to yet come up with any instrument that could determine reliability of evidence placed before Courts and Tribunals, they would judge same on basis of test of human probabilities. conduct of assessee, in facts and circumstances of case is crucial pointer in this regard. disclosure was made by managing partner of assessee firm, not only for it, but for all group concerns, being engaged in same activity of construction business, i.e., even for those for which he was neither partner or director. He is one of main persons, with other family members as partners/directors in other group firms, and both statements, specially second, which affirms first, carrying their conscious and willing consent. In statements, he explains modus operandi of charge of on-money ; rates being charged in respect of different schemes; their construction status; avenues and destination of on-money received, etc. On seizure of diary, wherein such receipts stood recorded, as also its application in firm(s) day-to-day (business) expenditure, disclosure was made, separately for each firm, also delineating period of its earning and manner of its investment. For assessee firm, it was stated to be in construction scheme itself, i.e., Vrajbhoomi, which was nearing completion. disclosure was subsequently, i.e., after about two months, enhanced by sum of Rs. 21 lakhs, even as share of assessee firm, at Rs. 10 lakhs, remained unchanged. These are undisputed incidents of disclosure statements, and on basis of which retraction has to be tested, evidentiary value of which stands statutorily enshrined, i.e., under Act, and even otherwise subject to provisions of ss. 114 and 11 5 of Indian Evidence Act, 1872. To my mind, same reveal, not only absence of any duress, as aforestated, but clear application of mind and consideration of facts in two depositions. Department having acted on statement(s), admittedly given without any influence, and foreclosed its investigations, would, by action of retraction, placed in precarious and unenviable situation and cannot now be called upon to adduce material to support assessee s statements, without assessee itself being called upon first to discharge onus on it of its statement as being untrue or based on incorrect/wrong facts. It is also pertinent to note that recording in books of part of on-money in case of M/s Adinath Construction, i.e., to extent of Rs. 14.22 lakhs (as against disclosed amount of Rs. 34.38 lakhs), is only subsequent to statement it would not qualify to be termed as on-money otherwise and rather, in facts and circumstances of case, supports Revenue s stand than that of assessee s. As it, thereby, confirms factum and practice of receiving of on-money , i.e., as stated, as well of its non-recording its regular books of account (refer answer to Q. No. 14/4th May, 1994). subsequent booking of on-money only for entity in respect of which material (one diary) was seized, and only to extent it was recorded therein, thus, under circumstances, in fact, betrays thinking and machination employed by assessee, using it as ploy to make travesty of entire judicial process of search and seizure proceedings; deposition under oath; and law in matter including plethora of legal pronouncements. As held by apex Court in case of Durga Prasad More (supra), taxing authorities are not supposed to put blinkers on their eyes while interpreting material or evidence they come across. In arriving at this inference in law, I draw support from, among others, following case law (i) CST vs. H.M. Esufali H.M. Abdulali 1973 CTR (SC) 371 : (1973) 90 ITR 271 (SC); (ii) Sumati Dayal vs. CIT (199 5 ) 12 5 CTR (SC) 124 : (199 5 ) 214 ITR 801 (SC); (iii) Council of ICAI vs. Mukesh R. Shah (2004) 186 CTR (Guj) 5 79; (iv) Dr. S.C. Gupta vs. CIT (2001) 170 CTR (All) 421 : (2001) 248 ITR 782 (All); (v) ITO vs. Bipin Farashkhana (2000) 69 TTJ (Ahd) 743 : (2000) 73 ITD 334 (Ahd); (vi) Hiralal Maganlal & Co. vs. Dy. CIT (200 5 ) 97 TTJ (Mumbai) 377 : (200 5 ) 96 ITD 113 (Mumbai). 4 . 3 As regards contention of non-discovery of any corresponding assets, I find same is only outcome of acceptance of retraction as legally valid, so that question of same would not arise in first place, if it is not considered as so. It is only on its acceptance as such, that onus would shift to Department, which, in order to establish its case, would be required to adduce evidence/material. said proposition, as aforestated becomes legally unsustainable in view of express provision of s. 132(4) of Act, besides ss. 114 and 11 5 of Evidence Act. alternate argument of assessee, i.e., to treat only 1 5 per cent of gross on-money as its income; balance 8 5 per cent being expended on construction activity (i.e., stock- in-trade) rather defeats assessee s case in this regard. One could consider some merit in argument, howsoever marginal, i.e., given position of law in matter placing onus squarely on assessee/deponent, where investment of on-money (undisclosed income) is on other assets, but where it is on stock-in-trade itself, gross rate of which actually matches that declared by assessee itself, same becomes incomprehensible. As requiring Department to adduce evidence or charging it for non-production of corresponding assets, is to penalize it for accepting assessee s version in first place. And if that were to be case, entire amount of disclosure would be liable to be added to assessee s income. 4.4 Lastly, I do not see any scope for application of ratio of decision of apex Court in case of Dhakeswari Cotton Mills Ltd. (supra), being in vastly different setting; present case revolving around pure question of law, i.e., of validity or otherwise of retraction by assessee in facts and circumstances of case. 5 . In view of foregoing, in my opinion, entire sum of Rs. 10 lakhs cannot be taken as assessee s income, and same shall have to be restricted to 1 5 per cent thereof, i.e., at Rs. 1, 5 ,000. REFERENCE UNDER S. 2 55 (4) OF IT ACT, 1961 10th April, 2006 As there is difference of opinion, matter is being referred to Hon ble President of Tribunal with request that following question may be referred to Third Member or pass such order as Hon ble President may think fit. "Whether, on facts and in circumstances of case, should Tribunal delete whole of undisclosed income of Rs. 10 lakhs or should restrict addition on account of on-money to Rs. 1, 5 ,000." Pradeep Parikh, Vice President (as third member) : June, 2007 There being difference of opinion between two learned Members of Ahmedabad Bench of Tribunal, in this case, Hon ble President was pleased to appoint me as Third Member vide his order dt. 24th April, 2007 under s. 2 55 (4) of IT Act, 1961 (the Act). point of difference referred to Third Member is as follows : "Whether, on facts and in circumstances of case, should Tribunal delete whole of undisclosed income of Rs. 10 lakhs or should restrict addition on account of on-money to Rs. 1, 5 ,000." 2. facts in present case, as admitted by both Members, are not in dispute. However, brief recapitulation of same would not be out of place. Search under s. 132 of Act was conducted at premises of assessee on 4th May, 1994 resulting into seizure of incriminating documents. Statement of Shri Kamal Shah, partner of assessee firm was recorded on same day. In this statement, he admitted undisclosed income of Rs. 34,38,000 in M/s Adinath Constructions, associate concern of assessee firm. Undisclosed income of Rs. 10 lakhs was disclosed in another associate concern M/s Suhani Builders and equal amount was also disclosed in hands of assessee. In all, total disclosure of Rs. 55 lakhs was made and it was also explained as to how same has been invested. Another statement of Shri Kamal Shah was recorded on 29th June, 1994 in which he enhanced disclosure to Rs. 76 lakhs, retaining disclosure of Rs. 10 lakhs in hands of present assessee. investment of enhanced disclosure was also explained in statement. However, in return filed by assessee, disclosed amount of Rs. 10 lakhs was not included and only total income of Rs. 48,910 was returned. On being questioned as to why disclosure made under s. 132(4) is not included, it was explained by assessee that there was no evidence of charging any on-money and hence merely on basis of statement, no such addition could be made. AO rejected contention of assessee and added sum of Rs. 10 lakhs to total income of assessee. CIT(A) accepted contention of assessee and observed that statement of Shri Kamal Shah was taken on record based on mere suspicion and accordingly on basis of facts it was retracted by assessee. He also observed that AO has not brought on record any cogent material or evidence in respect of on-money receipts and no incriminating material or records have been identified from seized record for making such addition. CIT(A) deleted addition. 3. When matter came up before Tribunal, learned JM took note of specific findings/observations of CIT(A) to effect that (a) statement of Shri Kamal Shah was taken on record based on mere suspicion, (b) same cannot be treated as admission and cannot be treated as material for framing assessment, and (c) AO has not brought on record any cogent material or evidence in respect of on-money receipts. learned JM observed that Revenue has not disputed correctness of this finding and hence conclusion reached by CIT(A) has to be accepted. alternative contention of Revenue, on basis of order of Tribunal in case of Adinath Construction that at least 1 5 per cent of receipts should be treated as undisclosed income was also rejected on ground that in case of Adinath Construction, diary was found in which details relating to receipt of on-money were found to be recorded. Moreover, in that case, assessee itself has accepted receipt of Rs. 14,22,000, but in present case, there was no such diary nor was there such admission. 4. learned AM took note of conduct of assessee insofar as that disclosure was made by managing partner of assessee firm, he had explained modus operandi of charging on-money, explained investment of such money and absence of duress while recording statement. learned AM held that these facts confirmed factum and practice of charging on-money. Finally, though he did not much agree with alternate contention to treat only 1 5 per cent of gross on-money as assessee s income, yet, he sustained addition to that extent only i.e. at Rs. 1, 5 ,000. 5 . Before me, learned counsel at outset, referred to para 19 in order of Tribunal in case of M/s Adinath Construction (ITA Nos. 197 5 and 1976/Ahd/1999 dt. 21st Oct., 200 5 ) to contend that statement given by Shri Kamal Shah was not sacrosanct insofar as that figures in seized material were stated to be approximate figures and that it was categorically stated by him that he would state exact disclosure only after examining all papers and account books. Extending this argument, it was submitted that no incriminating material was put before assessee nor any asset was found or seized. prohibitory orders continued till 29th June, 1994 and statement dt. 4th May, 1994 was later retracted. In interregnum there was no material found by AO to support addition. In case of Adinath also, it was contended, CIT(A) had stated that no addition can be made on basis of mere statement of assessee. Similar were observations of Tribunal in case of Adinath (supra) and also in case of Hastimal K. Bhansali (ITA No. 348/Ahd/1998 dt. 22nd Aug., 200 5 ). Further, in case of Adinath, 1 5 per cent addition was sustained because of admitted seized material showing on-money of Rs. 14.22 lakhs. Referring to order of learned AM, it was submitted that Department did not foreclose investigation even after 4th May, 1994 and kept pending for 55 days but nothing was up. Thus, learned counsel fully supported order learned JM. 6 . submission of learned Departmental Representative was that there was no formal retraction by assessee. In subsequent statement, only figures were changed and moreover, there was no evidence of any coercion during recording of statement. According to him, statement given by assessee did have evidentiary value and addition made on basis of said statement was justified. 7. I have duly considered rival contentions, material on record and have perused proposed orders by my learned Brothers. Let us examine main reasons given by learned AM for his conclusion. first reason which he considers to be crucial pointer is that Shri Kamal Shah is managing partner of assessee firm and in fact, is one of main persons who is in know of affairs of business. This fact is undisputable. However, having retracted from original statement, latter does not lead us to anywhere. search was on group as whole consisting of several entities. statements that he may have given during search are for group as whole and though in statement he has given break-up of disclosure, it is not corroborated by anything that might have been unearthed during search. There may have been hundreds of reasons and thoughts crossing in mind of deponent during search and it is not expected that whatever is reeled out during search is only after proper application of mind. He may have explained modus operandi of charging on-money, or avenues and destination of such money. Again, this may be true for group as whole but retracted statement does not lead to conclusion that particular assessee before us had undisclosed income of Rs. 10 lakhs. second reason given by learned AM is that enhancing figure of disclosure two months later shows proper application of mind and also absence of any duress while giving statement. Well, there may not be any evidence of coercion being exercised by search party, there may not be any duress also, but existence of confusion cannot be ruled out. Duress has to be distinguished from confusion. Duress is constraint illegally exercised to force on person to perform some act. This, as mentioned earlier, may be absent. But confusion means something thrown into disorder wherein person may be perplexed or embarrassed or thrown into turmoil. entire family is likely to be in state of perdition during and in aftermath of search. In fact, revision of earlier statement does not reflect application of mind but state of compounded confusion only. When such are state of affairs, no sanctity can be attached to statement and that cannot form sole basis to determine undisclosed income. It is not question of throwing burden on Revenue as observed by learned AM, but certainly when search is conducted, it needs to have some basis to come to conclusion of concealment. It is highly philosophical to say that restricting addition only in entity where material is found, betrays thinking and machination employed by assessee, using it as ploy to make travesty of entire judicial process of search and seizure proceedings. All said and done where is evidence to show that assessee had any undisclosed income barring statement given by Shri Kamal Shah while under utter state of confusion. As matter of fact, what has been stated about so-called machination of assessee is ill-founded and unwarranted allegation against assessee. Further, it is interesting to note that though learned AM has observed that alternate argument of treating 1 5 per cent of gross on-money as income defects (defeats) assessee s case in this regard. Despite this observation ultimately, he sustains addition to that extent only. Therefore, in view of foregoing discussion, I am convinced that there being no spectre of evidence regarding undisclosed income, no addition can be sustained. I am in agreement with view taken by learned JM. 8. matter may now be placed before regular Bench for disposal of appeal in accordance with majority opinion. I.S. Verma, J.M. 6th July, 2007 It was, in consequence upon difference of opinion between Members constituting Ahmedabad Bench "B", Ahmedabad that following question was got referred to for opinion of learned Third Member (through Hon ble President Tribunal) : "Whether, on facts and in circumstances of case, should Tribunal delete whole of undisclosed income of Rs. 10 lakhs or should restrict addition on account of on-money to Rs. 1, 5 ,000." 2 . Hon ble Third Member has now expressed his opinion on question referred to him as per order dt. nil June, 2007, whereby he has agreed with view taken by learned JM according to which whole of undisclosed income of Rs. 10 lakhs was directed to be deleted. 3. In view of majority decision, addition of Rs. 10 lakhs on account of undisclosed income having been sustained [sic-deleted] by CIT(A) stands deleted and assessee s appeal allowed [sic-Revenue s appeal dismissed] on this point. *** DEPUTY COMMISSIONER OF INCOME TAX v. PRAMUKH BUILDERS