He also rejected media reports that convicted militant David Headley had told the National Investigation Agency that Ishrat was an LeT operative.
"To the best of my knowledge, in the NIA report there is no mention of Ishrat Jahan," said Pillai.
In 2009, when Pillai was home secretary, the government retracted from its earlier statement in the Supreme Court that Ishrat was a militant.
"What is wrong with the two affidavits? One affidavit gives the basis of evidence in the files and other one is only clarifying the fact that which anybody would say that even if you give evidence that one is terrorist or alleged terrorist or a suspect, we said that doesn't give anybody right to kill them without a fair trial," Pillai said.
Modi's government was widely criticised for its perceived hesitancy in stopping the carnage targeting the minority community of Muslims across Gujarat, after the Godhra arson incident of a train rake carrying Hindu pilgrims being torched in February 2002.