Step-by-step analysis:
(A) The initial compound is \ce{C6H5CH3} (toluene). The goal is to first oxidize the methyl group to a carboxylic acid group (benzoic acid).
(B) Oxidizing agents like hot \ce{KMnO4 / OH^-} followed by acidic work-up (\ce{H3O^+}) are used to achieve this:
\[
\ce{C6H5CH3→[KMnO4/OH^-, \Delta][H3O^+] C6H5COOH}
\]
So, X is correctly identified in Option (3).
(C) Next, \ce{C6H5COOH} is reduced to \ce{C6H5CH2OH}.
(D) This involves reduction of carboxylic acid to primary alcohol. Although this can be done by LAH (LiAlH\textsubscript{4}), in this case the reagent used is diborane (\ce{B2H6}) followed by hydrolysis (\ce{H3O^+}):
\[
\ce{C6H5COOH→[B2H6][H3O^+] C6H5CH2OH}
\]
(E) This makes Y = (i) \ce{B2H6}, (ii) \ce{H3O^+}, also matching Option (3).
Hence:
\[
\boxed{\text{Correct Answer: (3)}}
\]