NRE gift receipts and cross-examination rights: adverse inference upheld, with no breach of natural justice shown.

Receipt of money through an NRE account was not shown to be a genuine gift because the recipient produced no credible material explaining the circumstances of the alleged gift from a person resident outside India. The facts were within the recipient's special knowledge, so the burden to explain them lay on that person; in the absence of a satisfactory explanation, an adverse inference was justified and contravention of foreign exchange law was established. Denial of inspection and cross-examination did not vitiate the adjudication because inspection had been offered, relied-upon documents were supplied, no timely request for cross-examination was made, and no prejudice was shown. The penalty order was sustained.

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Issues: (i) Whether receipt of money through an NRE account as an alleged gift was shown to be a genuine gift and thereby outside the prohibition under the foreign exchange law; (ii) Whether denial of inspection of documents and cross-examination vitiated the adjudication on the ground of breach of natural justice.

Issue (i): Whether receipt of money through an NRE account as an alleged gift was shown to be a genuine gift and thereby outside the prohibition under the foreign exchange law.

Analysis: The appellant accepted receipt of the amount from a person resident outside India, but produced no material explaining the circumstances in which such substantial amount was allegedly gifted. The claim of love and affection remained unproved. The fact supporting the alleged gift was within the special knowledge of the appellant, attracting the rule that the burden of explaining such facts lies on the person concerned. In the absence of a credible explanation, an adverse inference could be drawn, and the surrounding circumstances supported the conclusion that the receipt was not satisfactorily shown to be without consideration.

Conclusion: The contravention under the foreign exchange law was established, and the finding against the appellant was upheld.

Issue (ii): Whether denial of inspection of documents and cross-examination vitiated the adjudication on the ground of breach of natural justice.

Analysis: The record showed that inspection had been offered in the show-cause notice and copies of relied-upon documents had been supplied. No timely request for cross-examination was made during the adjudication proceedings, and no prejudice was demonstrated. The right of cross-examination was not treated as automatic in every case; it depended on a showing of necessity and prejudice. On the facts, the grievance was treated as an afterthought and insufficient to invalidate the order.

Conclusion: No breach of natural justice was made out.

Final Conclusion: The penalty order was sustained, and the appeal failed on merits.

Ratio Decidendi: Where the facts necessary to explain a receipt of money are especially within the recipient's knowledge, failure to prove a credible explanation permits adverse inference under the evidence law, and a belated or unsubstantiated objection based on cross-examination or inspection does not by itself vitiate the adjudication absent demonstrated prejudice.

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