Lit. “shitting into head” as the “bania” is a slangy word for human head featured in some other expressions like “obić banię” – hit someone’s head in a brawl. You say “sranie w banię!” if you disagree strongly with someone’s opinion and want to stress that it does not stand to common sense and either the person incapable of seeing through some propaganda he or she’s been fed, or wants to cynically pass this propaganda on to you which simply will not happen.
As the expression is brief, very graphic, and even rhymes, it is a very impressive, while also extremely rude way to interrupt someone’s argument. The closest American/English translation would be simply: “bullshit!”.