Tax on gift back

There is no tax evading. The interest part is assessed in the hands of both son.

Transaction is perfectly legal. However, in such arrangements, there is always a residual risk of litigation given the fact that ITD will try to question it irrespective of the fact that transaction does not attract tax as per provisions of the ITA. 

Thank You Sir for you expert view on question;

I also thought legally there is no issue but i had doubt.

I would like a bit more clarification would income tax dept. not say that purpose of gift was to reduce liability of Mr. X hence Tax evasion?

Any past case laws in respect of such transaction which can e given in case of litigation?