Assessee-company filed its return of income which was selected for scrutiny under CASS with the reason ‘Very Low PBDIT as compared to business turnover’. Assessing Officer issued detailed questionnaires in line with notice, examined matter, called for supporting evidence, and completed the assessment after being satisfied with the explanations tendered by assessee. Accordingly, returned loss was accepted in full as assessed income. Subsequently, PCIT invoked revisionary jurisdiction under section 263 on ground that Assessing Officer had failed to examine issue in respect of loan transaction of certain amount received by assessee from one company  Kesar Built system Pvt Ltd. PCIT recorded that as per MCA website, both assessee and ‘ Kesar Built system Pvt Ltd. PCIT  had common management, and two directors of assessee were holding 20 per cent shares each in Kesar Built system Pvt Ltd, thus, transaction of loan received by assessee squarely fell within definition of deemed dividend under section 2(22)(e). Accordingly, the assessment order was both erroneous and prejudicial to the interests of revenue. On appeal, the Tribunal held that the Assessing Officer had recorded the response as ‘N.A.’ (not applicable) against queries pertaining to limited scrutiny, including whether additional issues were examined. Thus, the Assessing Officer was never required, within the statutory framework of limited scrutiny under Faceless Assessment Scheme, to travel beyond CASS parameter, unless the case was formally converted into complete scrutiny with prior approval of the competent authority. No such conversion was done.  Therefore, the order passed by the Assessing Officer could not be termed erroneous merely because he did not make inquiries on an issue which was outside the scope of CASS selection and, thus, assumption of jurisdiction by PCIT under section 263 was unsustainable. Tribunal also held that the deemed dividend can be taxed only in the hands of the shareholder of the lending company, and not in the hands of the concern in which such shareholder is interested.  (AY. 2021-22)