Burden of explanation in foreign exchange transactions supports adverse inference when a claimed gift lacks credible proof.

When the facts explaining a foreign exchange transaction are especially within the noticee's knowledge, the burden of explanation lies on that person, and an unsupported account may justify an adverse inference. The note states that receipt of a foreign currency cheque, combined with the absence of credible proof of a genuine gift from natural love and affection, and supported by surrounding circumstances and a co-noticee's statement, was treated as sufficient to sustain a finding of contravention. It also records that parity with another person who was exonerated does not defeat a lawful order, since negative equality is not a valid challenge.

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Issues: Whether the appellant's receipt of a foreign exchange cheque against payment to a non-resident established contravention of the foreign exchange law, and whether the evidentiary burden was discharged to displace the inference drawn from the surrounding circumstances.

Analysis: The receipt of a substantial foreign currency cheque, coupled with the absence of credible proof of a genuine gift arising from natural love and affection, justified an adverse inference against the appellant. The facts explaining the source and legitimacy of the alleged gift were especially within the appellant's knowledge, so the burden of explanation rested on the appellant. The Tribunal treated the surrounding circumstances, the co-noticee's statement, and the absence of a convincing rebuttal as sufficient to sustain the finding of contravention. The plea of parity with another exonerated person was held not to undermine the adjudication, as negative equality is not a valid basis to challenge a lawful order.

Conclusion: The contravention was held proved and the penalty order was sustained in favour of the Revenue.

Final Conclusion: The appeal failed on merits, and the penalty imposed under the foreign exchange law was maintained.

Ratio Decidendi: Where the facts explaining a transaction are especially within the knowledge of the person proceeded against, the burden of explanation lies on that person, and an adverse inference may be drawn from an unconvincing or unsupported explanation, especially in the presence of corroborative surrounding circumstances.

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