Judgment Nazir Ahmad, J. 1. A consolidated statement of the case has been submitted by the Income-tax Appellate Tribunal, Patna Bench "B", Patna (hereinafter referred to "as the Tribunal "), under Sec.256(2) of the Income-tax Act, 1961 (hereinafter refererd to as "the Act"), referring the following common question of law for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in cancelling the orders of penalty under Sec.273 of the Income-tax Act 1961 ? " 2. The relevant facts of the case may be culled from the statement of the case and the other orders on record. The assessee, a State Government undertaking, filed returns disclosing loss in both the assessment years 1963-64 and 1964-65 which are the assessment years involved in the present case. For the assessment year 1963-64, the assessment was made on a total income of Rs. 15,47,450. It was found that in the assessment year, the revenue account of the assessee showed an income of Rs. 26,39,382. The Income-tax Officer found that the assessee had not complied with the provisions of Sec.212(3) of the Act and no advance tax was paid as required under that section. On completion of the assessment, the Income-tax Officer proceeded under Sec.273 of the Act for default in complying with the provisions of Sec.212(3} of the Act. As there was no reply to the show-cause notice, the Income-tax Officer held that the default was without any reasonable cause and he, therefore, imposed a penalty of Rs. 94,892. 3. For the assessment year 1964-65, the revenue account of the assessee showed an income of Rs. 46,25,693 and the assessment was made on a total income of Rs. 19,81,420. The Income-tax Officer, for similar reasons, imposed a penalty of Rs. 1,13,550 on the assessee for the assessment year 1964-65. The penalty orders of the Income-tax Officer have been annexed and marked as annexures A and B forming part of the statement of the case. 4. The assessee appealed before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner found that the assessee-Corporation had taken over on May 1, 1959, all the assets and liabilities of the Rajya Transport of the Government of Bihar and the first assessment of the assessee relating to the assessment year 1960-61 was completed on February 15, 1965. 4. The assessee appealed before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner found that the assessee-Corporation had taken over on May 1, 1959, all the assets and liabilities of the Rajya Transport of the Government of Bihar and the first assessment of the assessee relating to the assessment year 1960-61 was completed on February 15, 1965. It was found by the Appellate Assistant Commissioner that though the income assessed for the assessment year 1963-64 was Rs. 15,47,448, no estimate had been filed under Sec.212(3) of the Act. The Appellate Assistant Commissioner further found that the assessee had filed a return showing a loss of Rs. 91,77,461 and the main reason which resulted in this difference was as a result of adjustment of depreciation. Whereas the assessee had adjusted the depreciation of Rs. 88,56,562, the ultimate depreciation came to Rs. 64,79,938. Besides this, the assessee had claimed carry forward of the preceding years losses which were shown at Rs. 81,10,694. The Appellate Assistant Commissioner also found that the income from interest on certain investments had not been shown by the assessee, though an amount of Rs. 2,54,751 was assessable as interest in this year. The Appellate. Assistant Commissioner went into the details of the figures of depreciation and found that whereas the assessee had claimed depreciation on the basis of the value shown in the balance-sheet, it was ultimately found that against the original cost of vehicles which was shown at Rs. 1,53,72,599, there was depreciation reserve to the extent of Rs. 1,12,69,253. Thus, according to the Department, the actual cost of the buses on which depreciation was to be allowed was the difference between the two figures which come to Rs. 41,03,346. The Income-tax Officer while computing the income for the assessments for the assessment years 1961-62 and 1962-63, had allowed depreciation as claimed and it was only later that he realised the mistake and rectified the assessments under Sec.154 of the Act by re-calculating the depreciation on the correct actual cost. The Appellate Assistant Commissioner also found that depreciation had been claimed in the assessment years 1960-61 and 1961-62 on the buses added during these years on the basis that the buses plied during the whole of the accounting period. The Appellate Assistant Commissioner also found that depreciation had been claimed in the assessment years 1960-61 and 1961-62 on the buses added during these years on the basis that the buses plied during the whole of the accounting period. Initially, the Income-tax Officer allowed depreciation on that basis for both the years but, later on, it was found that the depreciation was allowable only for a part of the year in respect of several buses. The Appellate Assistant Commissioner found that as against the claim of Rs. 24,54,120, ultimately allowance of only Rs. 9,08,550 was allowed in the assessment year 1961-62. The amount of interest had not been disclosed in the assessment years 1960-61 to 1962-63. 5. On the aforesaid facts, the Appellate Assistant Commissioner came to the conclusion that the assessee had originally inflated its losses by making excessive claims of depreciation, and did not disclose the income from interest which ran into several lakhs of rupees each year. The Appellate Assistant Commissioner also found that the assessee had been found guilty of concealment of interest and penalty under Sec.271(1)(c) was levied. Thus, the Appellate Assistant Commissioner held that the assessee should have filed the estimate as required under Sec.212(3) of the Act. He, therefore, confirmed the penalty. As regards the assessment year 1964-65, the Appellate Assistant Commissioner found that the assessee had shown brought forward losses of the earlier years to the extent of Rs. 91,77,461, but had not shown the interest income in the return to the extent of Rs. 4,67,754. The Appellate Assistant Commissioner also found that the difference between the figure of depreciation claimed by the assessee and the depreciation actually allowed by the Income-tax Officer was Rs. 23,40,597, and the assessee also claimed as deduction reserve to the extent of Rs. 27,05,796 and thus a loss of Rs. 1,46,91,581 was shown. The Appellate Assistant Commissioner held that the income was converted into artificial loss. He, therefore, upheld the penalty for the assessment year 1964-65 as well imposed by the Income-tax Officer under Sec.273 of the Act. The orders of the Appellate Assistant Commissioner for the two assessment years have been annexed and marked as annexures C and and D forming part of the statement of the case. 6. He, therefore, upheld the penalty for the assessment year 1964-65 as well imposed by the Income-tax Officer under Sec.273 of the Act. The orders of the Appellate Assistant Commissioner for the two assessment years have been annexed and marked as annexures C and and D forming part of the statement of the case. 6. When the matter came before the Tribunal, on behalf of the assessee it was submitted that the first assessment which was concluded in the case was made on February 16, 1965, whereas the assessees obligation to file the estimate of advance tax had arisen on March 15, 1964, and March 15, 1963, for the two assessment years in question. On these dates, the assessee had before it the losses claimed for the assessment years 1960-61 and 1961-62 and naturally the assessee considered that these losses should be carried forward. The claim of depreciation was on the basis of figures shown in the balance-sheet and its claim was a bona fide claim. It was also submitted that there was no mens rea in this case and so penalties should not have been levied. The Tribunal considered the facts of the case and held that at the time when the estimates had to be made, the assessee was not aware that its claim of losses would be substantially watered down and ultimately there would be no sufficient carry forward of losses so as to reduce the taxable income for these years into figures of losses. The Tribunal has also found that the basis of calculation of depreciation was found to be wrong but even the Income-tax Officer had originally accepted the assessees claim in the earlier years. The Tribunal, therefore, held that the assessee could not be taken to have deliberately made a false claim in the earlier years in order to claim excessive depreciation and it could not also be held that the assessee was conscious of the fact that its claim was not in accordance with law. The Tribunal considered the fact that the assessee was a Corporation owned by the State Government and that it appears that the advice given to it regarding the claim of depreciation was not correct. However, the Tribunal held that there was no mens rea involved in the action of the Corporation. The Tribunal considered the fact that the assessee was a Corporation owned by the State Government and that it appears that the advice given to it regarding the claim of depreciation was not correct. However, the Tribunal held that there was no mens rea involved in the action of the Corporation. Similar finding applied to the claim of depreciation for the whole year whereas it was allowable only for a part of the year. Regarding the interest, the Tribunal found that it had not actually been received by the Corporation till finalisation of that account and, therefore, though it was found to be taxable, there was reason for its not being shown in the account. The Tribunal further found force in the argument of the assessee that even if the amount of interest was considered, it would have been wiped out by the earlier years claim of losses. The Tribunal, therefore, held that the assessee-Corporation had taken into account the loss returns filed for the earlier years and the depreciation which was allowed on the basis of the balance-sheet and there was nothing to show that the earlier claims were deliberately exaggerated by the assessee. The Tribunal held that the assessee had bona fide belief that no tax would be payable by the assessee-Corporation for these two years and, therefore, it also had bona fide belief that it need not comply with the provisions of Sec.212(3) of the Act. The Tribunal also held that similar position held good for the assessment year 1964-65 also, as in that year also the assessee had nothing but its own loss returns for earlier years to take into consideration and, therefore, cancelled the penalty imposed. The consolidated order of the Tribunal has been annexed and marked as annexure E forming part of the statement of the case. Hence, this reference against the said order of the Tribunal. 7. Now, let us see whether cancellation of penalty by the Tribunal for the assessment years 1963-64 and 1964-65 was justified. The consolidated order of the Tribunal has been annexed and marked as annexure E forming part of the statement of the case. Hence, this reference against the said order of the Tribunal. 7. Now, let us see whether cancellation of penalty by the Tribunal for the assessment years 1963-64 and 1964-65 was justified. Under Sec.212(3) of the Act, an assessee who has not been previously assessed by way of regular assessment under this Act, shall, in each financial year, before the date on which the last instalment of advance tax is due in his case under Sub-section (1) of Sec.211, if his current income is likely to exceed the amount specified in Sub-section (2) of Sec.208, send to the Income-tax Officer an estimate of the current income and the advance tax payable by him on the current income calculated in the manner laid down in Sec.209, and shall pay such amount of advance tax as accords with his estimate on such of the dates specified in Sec.211 as have not expired, by instalments which may be revised according to Sub-section (2). 8. It has been conceded by both the parties that under Sec.211 of the Act, the last date for filing the estimate in the case of the assessee was March 15, 1963, and March 15, 1964. The accounting year of the assessee ended on the 31st March of each year. It is not disputed that the assessed income of the assessee is Rs. 15,47,450 and Rs. 19,81,420 for the assessment years 1963-64 and 1964-65, respectively. But the question is whether penalty can be imposed in spite of its assessed income. The Appellate Assistant Commissioner has pointed out in the appeal relating to the assessment year 1963-64 at page 3 of the paper book that the assessee-Corporation took over on May 1, 1959, all the assets and liabilities (including buses and other vehicles) at book value from the Rajya Transport, Government of Bihar, and the first assessment which related to the assessment year 1960-61 relevant to the accounting period from May 1, 1959, to March 31, 1960, was made on February 15, 1965. It is also an admitted fact that the assessee had not furnished any estimate of advance tax payable in accordance with the provisions of Sec.212(3) of the Act during the financial year 1962-63 and no advance tax was paid on the basis of such statement made during the period for the assessment year 1963-64. He has also pointed out at pages 4 and 5 of the paper book that the original cost of the vehicles was shown at Rs. 1,53,72,599 but the Rajya Transport, Government of Bihar, had shown a depreciation reserve to the extent of Rs. 1,12,69,253. It is the admitted case of both the parties that no depreciation was allowable to the Rajya Transport, Government of Bihar. However, the balance-sheet showed the original cost of the vehicles and also the depreciation reserve as taken over by the assessee from the Rajya Transport, Government of Bihar. The Appellate Assistant Commissioner has pointed out that if depreciation reserve is deducted from the original cost of the vehicles, then the net cost of the vehicles to the Corporation on the date of take over would be the difference between these two figures, namely, Rs. 41,03,346. The appellant claimed depreciation on the original cost of Rs. 1,53,72,599 when in fact the claim ought to have been made on Rs. 41,03,346. 9. It appears that the assessee showed losses in the income-tax returns for the assessment years 1960-61, 1961-62 and 1962-63 at Rs. 38,10,595, Rs. 55,74,521 and Rs. 81,10,694, respectively. As has been pointed out by the Appellate Assistant Commissioner at page 6 of the paper book relating to the assessment year 1963-64, the assessee was originally assessed on losses for all the three assessment years. He has also pointed out at page 5 of the paper book that the assessee earned interest in the assessment years 1960-61, 1961-62 and 1962-63 to the extent of Rs. 4,69,335 Rs. 4,79,333 and Rs. 3,63,920. However, in these years the assessee did not show the interest income and claimed losses which were originally allowed for all these three assessment years to the assessee. It has also been pointed out by the Appellate Assistant Commissioner that in the assessment year 1963-64, the assessee showed a loss of Rs. 91,77,461 and for the assessment year 1964-65 the assessee claimed a loss of Rs. 1,46,91,581. It has also been pointed out by the Appellate Assistant Commissioner that in the assessment year 1963-64, the assessee showed a loss of Rs. 91,77,461 and for the assessment year 1964-65 the assessee claimed a loss of Rs. 1,46,91,581. It cannot be doubted that the assessee was assessed for the first time on February 16 1965. The assessee had been filing the returns in the same manner throughout and this showed that it was under the impression that the assessee was entitled to depreciation on the original cost of the vehicles and that the depreciation reserve created by the Rajya Transport was a fictitious reserve as no depreciation was allowed to the Rajya Transport. The first assessment was made on February 16, 1965, and the claim of loss was allowed in the assessment years 1960-61, 1961-62 and 1962-63 as originally assessed as pointed out by the Appellate Assistant Commissioner at page 6 of the paper book relating to the assessment year 1963-64 and so the assessee could not know that the returns filed were not correct. The Tribunal has clearly pointed out in the order that in the assessment years 1960-61 and 1961-62, the Income-tax Officer originally accepted the claim of the assessee and then he rectified the assessment under Sec.154 of the Act and it was held in the assessment year 1960-61 that the rectification under Sec.154 of the Act was barred by limitation and the Department has taken action against this order under Sec.256(1) of the Act. 10. Mr. K, N. Jain, the learned advocate for the assessee, has asserted that in the assessment year 1961-62, the Income-tax Officer rectified the assessment but the assessee had moved in the matter. It cannot be doubted that in the assessment year 1960-61, the assessment remained which means that the loss of Rs. 34,53,366 stands as has been shown at page 6 of the paper book by the Appellate Assistant Commissioner, If this loss is carried forward, then the assessees claim on that basis may be accepted in the assessment year 1961-62. However, the fact remains that for the first time the assessment was made on February 16, 1965, and the assessee till that date was following the same method of accounting not showing interest income and claiming depreciation according to the original cost of the vehicles. However, the fact remains that for the first time the assessment was made on February 16, 1965, and the assessee till that date was following the same method of accounting not showing interest income and claiming depreciation according to the original cost of the vehicles. The Tribunal also held that the interest was not received by the assessee till the end of the accounting period and the assessee bona fide believed that the interest income is not to be shown in the return. Even if interest income should have been shown, there would have been loss according to the assessee. Till the assessment is made, the assessee cannot find out as to what system should be followed. When the assessment was made on February 16, 1965, and the Income-tax Officer accepted the claim of the assessee, then there could be no basis for holding that the assessee was bound to file the estimated income and the estimated tax as required by Sec.212(3) of the Act. The Tribunal has given a finding that the assessee had acted in a bona fide belief that no tax should be payable by the Corporation for the two years and so it was not necessary for the assessee to comply with the provisions of Sec.212(3) of the Act. Sec.273(b) of the Act shows that if the Income-tax Officer is satisfied that any assessee has without reasonable cause failed to furnish an estimate of advance tax payable by him in accordance with the provisions of Sub-section (3) of Sec.212 of the Act, he may impose penalty. The circumstances discussed above clearly go to show that the assessee had reasonable cause in not filing the estimate of advance tax. The Tribunal has given a finding that the assessee was under a bona fide belief that no tax was payable by the assessee-Corporation for the two years and this amounts to a finding that the assessee has shown reasonable cause. 11. Mr. B. P. Rajgarhia has relied on the case of CIT V/s. S. Teja Singh [1959] 35 ITR 408 (SC), where it was held that by a legal fiction the failure of a person not hitherto assessed to send an estimate of tax payable by him in accordance with Sec.18A(3) of the Indian Income-tax Act, 1922, is treated as a failure to furnish a return of income under Sec.22. Thus, this decision is not applicable in this case, as there is a specific provision under Sec.273(b) of the Act that penalty will be imposed if the assessee without reasonable cause fails to furnish an estimate of advance tax. 12. Mr. B. P. Rajgarhia has also relied on the case of Kashmir Vastralaya V/s. CIT [1978] 112 ITR 630 (Pat) which only shows that mere failure to furnish an estimate of advance tax under Sec.212(3A) of the Act within the requisite time cannot visit the assessee with penalty, and that the initial burden to show want of reasonable cause to furnish the estimate lies upon the Revenue and once the Revenue has shown prima facie that there was no reasonable cause for not furnishing the estimate within the time allowed by the statute, the onus will be upon the assessee. In this case, it was held that there was sufficient ground for holding that there no reasonable cause for non-filing of the estimate, specially when the assessee had not availed of the opportunity of extending the date for submission of the estimate given by the proviso to Sub-section (3) of Sec.212 of the Act and the imposition of penalty was valid. In this case, it was held that there was no reasonable cause. 13. Mr. B. P. Rajgarhia has also relied on the case of H. H. Maharani Sharmishthabai Holkar V/s. Addl. CIT [1981] 129 ITR 13 (MP). In this case, the Tribunal held that it was for the assessee to show reasonable cause and the element of mens rea or guilty intent was not required to be taken into consideration while imposing penalty under Sec.273(c) and in those circumstances, the Madhya Pradesh High Court held, affirming the decision of the Tribunal, that the levy of penalty on the assessee was valid. 14. Mr. K. N. Jain, the learned advocate for the assessee, has relied on the case of Hindustan Steel Ltd. V/s. State of Orissa [1972] 83 ITR 26, where the Supreme Court has held that no penalty can be levied where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. In this decision, it was also held that those in charge of the affairs of the appellant-company in failing to register the company as a "dealer" acted in the honest and genuine belief that the company was not a dealer and granting that they erred, no case for imposing penalty was made out. This decision of the Supreme Court is exactly applicable to the facts of the present case before us. 15. Mr. K. N. Jain has also relied on the case of Addl. CIT V/s. Roshan Lal Kuthiala [1975] 100 ITR 329 (P & H), which is a decision of the Punjab and Haryana High Court. In this decision, it has been held that it is a well-settled rule that an inference of fact from proved facts is a question of fact, and whether there is a reasonable cause for filing a delayed return or not is a pure question of fact, for its determination depends on facts, and that the only grounds on which a conclusion of fact can be challenged are : (a) that it is not supported by any legal evidence or material, and (b) that the conclusion of fact drawn by the Appellate Tribunal is perverse and is not rationally possible. In this decision, the Tribunal held that the asses-see had reasonable cause for not filing the return up to the period the return remained unfiled. It cannot be doubted that when the Tribunal holds that the assessee had a bona fide belief, it is a finding of fact to the effect that there was reasonable cause and so penalty was rightly cancelled by the Tribunal. 16. It has also been held by the Allahabad High Court in the case of CIT V/s. Co-operative Cane Development Union Ltd. [1975] 101 ITR 368, where the Appellate Assistant Commissioner and the Tribunal accepted the assessees contention that advance tax was not paid because it was under the bona fide belief that its income was exempt from tax, that it was sufficient cause for not depositing the advance tax and that penalty under Sec.273(b) of the Act is leviable only if the assessee fails to pay advance tax without reasonable cause. 17. 17. Thus, the aforesaid decisions clearly go to show that if there is reasonable cause for not filing the estimate of advance tax, then no penalty can be leviable under Sec.273(b) of the Act for not filing an estimate of advance tax payable by an assessee in accordance with the provisions of Sub-section (3) of Sec.212 of the Act. 18. I have given my reasons for holding that the assessee was following a particular pattern and was claiming losses in every year on the basis that the assessee had actually not received the interest income and the assessee was claiming depreciation on the original cost of thee vehicles. Especially in the assessment years 1960-61, 1961-62 and 1962-63, the assessee claimed losses and the Income-tax Officer originally allowed losses as claimed by the assessee. Thus, it has to be held that there was reasonable cause for the assessee in not filing the estimate of advance tax and so no penalty is leviable against the assessee for both the assessment years. 19. In view of my findings above, I hold that the Tribunal was correct in law in cancelling the orders of penalty under Sec.273 of the Act. The question is, accordingly, answered in favour of the assessee and against the Revenue. However, the parties will bear their own costs. Let a copy of this judgment be forwarded to the Income-tax Appellate Tribunal through the Assistant Registrar under the seal of the court and the signature of the Registrar as required under Sec.260 of the Act. Uday Sinha, J. 20 I agree.