JUDGMENT We have heard learned counsel appearing for parties. special appeals are directed against orders dated January 29, 1999, passed by Income-tax Appellate Tribunal, Jaipur Bench, Jaipur (for short, "the Tribunal"), by which Tribunal has partly allowed appeals filed by assessee and dismissed appeals of Revenue. appeal was admitted on following substantial questions of law: "1. Whether statement recorded under section 132(4) of Income- tax Act can be ignored or overlooked, which is free from any ambiguity or extraneous circumstances? 2. Whether normal course of assessment under section 143(3) cannot be adopted and, accordingly, estimate of income of entire period on basis of bills/vouchers found for few days or part period can be made as assessment in this case relates to pre-block period assessment? 3. Whether Income-tax Appellate Tribunal was justified in approving finding of Commissioner of Income-tax (Appeals) which has no reasonable basis for reaching to conclusion about estimate of sales from Rs. 7,59,000 to Rs. 5 lakhs only?" assessee-firm derived income from trading of silver ornaments and also pawning of gold and silver ornaments. It maintained two separate trading accounts; one for silver ornaments and another for silver bullion. On search carried out at business premises and also residential premises of partners on October 10, 1990, two diaries indicating credit sales, out of regular books, were found and seized. These diaries started on April 1, 1990. diaries relating to any earlier years were not found. At time of search, statements of partners of assesseefirm were recorded under section 132(4) of Income-tax Act, wherein partners surrendered amount of Rs. 6,13,080, which represented entries in two diaries relating to unaccounted credit sales. Notices were issued under section 148, on which revised return for current year 1989-90) was filed, in which assessee surrendered Rs. 2,28,540. Assessing Officer assessed total unexplained income for four years at Rs. 8,92,268. In appeal before Commissioner of Income-tax (Appeals), addition of Rs. 5,08,500 was made, and relief was given for remaining amount. details of revised returns, assessments and orders upheld by Commissioner of Income-tax (Appeals) are given as follows: Assessment Filed by Finally upheld Assessed year assessee by CIT(A) 1990-91 1,52,690 2,74,750 1,75,000 1989-90 55,430 2,67,168 1,76,000 1988-89 14,020 1,84,100 87,500 1987-88 6,400 1,66,250 70,000 2,28,540 8,92,268 5,08,500 Commissioner of Income-tax (Appeals) held that grievance of appellant was that additions made were totally unjust, in regard to recorded transactions. appellant had maintained different details, by way of books of account, bills, etc. decline in gross profit was due to fluctuation in market, and thus, there was no justification in observing that trading addition was required, relating to books of account maintained by appellant. With regard to additions made, it was held that appellant had surrendered amounts on basis of peak investment. unrecorded sales were reported to be higher than amount surrendered for peak investments. Commissioner of Income-tax (Appeals) found that in view of provisions of section 145, estimation was justified, and there was no infirmity, however, estimations so made, in regard to unaccounted transactions were on much higher side and found that it would be fair and reasonable, if unrecorded sales are directed to be taken at Rs. 5 lakhs, and gross profit at 35 per cent. on estimated addition was deleted. It is submitted on behalf of Revenue that appellate authority as well as Tribunal have grossly erred in law, inasmuch as they could not have reduced amount, in view of clear and unequivocal surrender made by assessee. He has relied on V. Kunhambu and Sons v. CIT [1996] 219 ITR 235 (Ker), in which Kerala High Court held that considering income from undisclosed sources and on surrender made in premises, assessment on basis of voluntary statement was valid. Kerala High Court, considering import of section 132(4), held that it does not change substantive provision of Act nor does it lay down different method of using statement recorded under subsection (4) of section 132 of Act. Sub- section (4), which permits interrogation of persons not only in relation to books of account, etc., found as result of search but also on any other matter, relevant for any proceeding under Act. In present case, Tribunal held that assessments, on estimation, were not permissible, on face of material, which was found during search, and statement made by assessee. assessing authority went beyond material and statement in making assessment on higher side, on basis of estimation. Learned counsel appearing for assessee relied upon statement made by assessee, from which we find that, at time of recording statement making surrender, assessee had stated that such surrendered amount may be adjusted from sales, in statement of accounts, which have been recorded in blue and red diaries, which were seized. After seizure on October 10, 1990, chartered accountant of assessee had sent clarification on December 8, 1990, with regard to surrender that entire surrendered amount of Rs. 9,32,107 was coupled with statement that amount may be verified from credits entered in diaries. chartered accountant clarified statement, with observation that surrendered amount must be subject to verification of credits entered in diaries and thereby reducing amount surrendered to that extent. He had further explained that amount worked out was on peak investment, for which working had been done by arranging transactions entered in diaries in historical sequence in details statement. statement included both unexplained and surplus resulted from such transactions. total unexplained investment, according to chartered accountant, worked out to Rs. 6,13,080 as against Rs. 9,32,107 arrived by merely roughly adding sums mentioned in diaries irrespective of it being debit entry or credit entry. Further, surplus of cash according to working statement, comes to Rs. 1,52,407. We do not find any force in submission of learned counsel appearing for Revenue that surrender was unconditional, without any explanation, or that, assessee had agreed, at that time to add entire surrendered amount to his income. He had clearly mentioned that amount surrendered, as reflected in red and blue diaries, should be accounted, subject to verification of credits entered in diaries, and thereby, reducing amount of surrender, to that extent. We do not find any error in findings of Tribunal, that statements made during search, must be correlated with records, which are found, and if there is any ambiguity, explanation given by assessee should be taken into consideration, before making assessment. legal position with regard to undisclosed income from diaries, does not need any elaboration, however, if material found during search, does not tally with statement records, and that statement is made subject to material, which has been seized, conscious effort should be made to consider effect of statement and to make appropriate assessment by correlating statements with due material. Learned counsel appearing for respondent has relied on Swaroop Chand Kojuram v. CIT [1999] 235 ITR 732 (Raj) and CIT v. Pushpa Raj Mehta [1999] 237 ITR 638 (Raj). In both these cases, decided by Division Bench of this court, it was held that method of computation of income does not raise any question of law, much less, substantial question of law, to be considered by court. Since appeal has been admitted, we have examined questions. We are satisfied that Commissioner of Income-tax (Appeals) had after taking into account statement of assessee, in which he had surrendered income and having referred it to books of account, disagreed with quantum of additions made by assessing authority. assessment made by Commissioner of Income-tax (Appeals) was not found to be incorrect by Tribunal and, thus, questions raised by Revenue are returned in favour of assessee and against Revenue. All income-tax appeals are, accordingly, dismissed. copy of this judgment be placed in all connected files. *** Commissioner of Income-tax v. Jagdish Narain Ratan Kumar