A petition has been filed in Rajasthan High Court challenged the provision deducting TDS on Cash Withdrawals from Bank. The high court has issued notice to the centre and CBDT on the provision of deducting TDS on cash withdrawal from a bank account.
The Petitioner Abhay Singla has challenged the validity of the newly introduced Section 194N of Income Tax Act, 1961 through Finance (No. 2) Act, 2019 as the said provision is clearly violating the Article 14, 19, 21 & 265 of the Indian Constitution.
The provision provides proposal to levy TDS @ 2% on cash payments in excess of Rs. 1 Crore for those who file Income Tax Return and Rs. 20 Lakh for those who have not file Income Tax Return of last three years in aggregate made during the year, by a banking company or corporate bank or post office, to any person from one or more accounts maintained by the recipient. Section 194N providing for 2% TDS on cash withdrawals exceeding Rs. 1 crore or Rs. 20 Lakh as per their respective conditions is doubtful. Since tax to be deducted at source is on cash withdrawals which shall not be treated as income, the question of deduction of any tax at source does not arise. When the transaction is not liable to levy of income tax, the question of deduction of income tax at source with a provision for adjustment of the same against the ultimate tax liability cannot be said to be legal.
A division bench of Acting Chief Justice MM Srivastava and Justice Samir Jain has asked the Union Finance Ministry Secretary, CBDT Chairman, and the Principal Chief Commissioner of Income Tax , Rajasthan to respond to the notice in four weeks.
Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
