Section 194N places the obligation to deduct tax at source on...

Section 194N places the obligation to deduct tax at source on the banking company making a cash payment, not on the customer withdrawing cash. Failure to deduct attracts the statutory consequence under section 271C against the person responsible for deduction. A bank cannot impose a lien on a customer's current account for an alleged TDS liability without statutory authority or a direction from the income-tax authorities. The lien was directed to be released and account operations permitted after the customer furnished income-tax returns for the relevant three consecutive years, without limiting lawful action by tax authorities.