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12. On the basis. of the aforesaid evidence, learned counsel argued that the genuineness of the gift transactions are conclusively established inasmuch as the identity and capacity of the donor as well as factum of the gift transactions stand established-learned counsel argued that the plethora of evidence furnished by the assessed in support of genuineness of the transaction has not been controverter by the revenue authorities while holding the gift transactions as sham. Learned counsel further added that the department has rested its case solely and exclusively on the two statements dated 25-11-1999 and 6-1-2000. It is submitted that the first statement recorded on 25-11-1999 is the preliminary statement recorded before the commencement of search and cannot be considered as a statement recorded under section 132(4). Learned counsel pointed out that the fact that the statement is a preliminary statement recorded before the search is amply evidenced by the observation of the assessing officer at p. 5 of the assessment order to this effect. He further referred to p. 101 of the departmental paper book wherein it is indicated that question Nos. 1 to 19 of the statement were put to the assessed at preliminary stage and thereafter question No. 20 onwards form part of the statement recorded during the search. Learned counsel referred to the letter sent by the assessed immediately after the search retracting the admission and stating that the admission has been procured under coercion and pressure. Shri Jam filed an extract from the Kelkar Committees Report (printed in (2002) 258 ITR (St) 40) wherein the Committee has made a critical reference to the practice adopted by the departmental Officers obtaining forced confession from the assessed during the course of search operations. The Finance Minister in his Budget speech for the financial year 2003-2004 observed that in view of the recommendations of the Kelkar Committee, it has been decided that no confession shall be obtained during search and seizure operations. Learned counsel filed a copy of the letter issued by Central Board of Direct Taxes from the file F. No. 286/2/2003-IT (Inv) on 10-3-2003 pointing out that instances have come to the notice of the Board where assesseds have been forced to confess undisclosed income during the course of search and seizure and such confessions, if not based upon credible evidence, are later retracted by the concerned assesseds. The Board, therefore, advised the field officers that no attempt should be made to obtain confession as to the undisclosed income. The Board further advised that in respect of pending assessment proceedings, assessing officer should rely upon the evidences gathered during the course of search or thereafter while framing the relevant assessment orders. Heavily relying upon the aforesaid recommendations of the Kelkar Committee as well as directions issued by the Central Board of Direct Taxes to the field officers, learned counsel strongly urged that the admission regarding the gift transactions being non-genuine have been obtained by the search party under coercion and the same should not be relied upon.

33. Thus, the first issue regarding the applicability of section 158B(b) to the gifts in question is decided in favor of the assessed and we hold that the issue of genuineness of the gifts lies beyond the purview of the block assessment.

34. The second and third issues as formulated by us above, arising from the present appeal, are basically concerned with the genuineness of the gifts in question. Without prejudice to our finding that the issue of genuineness of gifts lies outside the purview of block assessment as envisaged under Chapter XIV-B, we proceed to consider this aspect of the controversy also. The sheet anchor of department case is the admission made by the assessed that the gifts are non-genuine and have been arranged through a chartered accountant on payment of commission at 3 per cent. Learned counsel was at pains in emphasising that the statement has been procured by the assessed under coercion and pressure and is contrary to CBDTs instruction issued in March, 2003 pursuant to Kelkar Committee Report wherein the Committee has acknowledged the prevalence of the practice amongst the search parties to obtain forced confessions of undisclosed income from the assesseds. The proposition is well established that admission made by an assessed during search operations constitute substantive evidence in view of sections 17 and 21 of the Evidence Act. However, such admission cannot be considered as conclusive evidence against the assessed. It has been held by the Apex Court in Pullangode Rubber Produce Co. v. State of Kerala (supra), relied upon by the learned counsel, "an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the assessed who made the admission to show that it is incorrect."