Cityon Systems' record carries seven straight unqualified audit opinions, but the clean opinions sit alongside a promoter's SEBI penalty unpaid for six years, a ₹24.69 crore tax demand carried as a contingent liability for five, and an internal audit system that its own filings say vanished in FY2024 and FY2026.
Key findings
- Promoter's ₹2 lakh SEBI penalty unpaid for six years, with attachment notices outstanding
Major- SEBI imposed a ₹2,00,000 penalty on promoter Mr. Sanjay Kumar on 27.02.2020 and issued a Notice of Attachment of his bank and demat accounts. The secretarial auditor has flagged the matter as "still pending for action" in every report from FY2020-21 through FY2025-26, the sixth consecutive year. The FY2025-26 Annual Report still claims no significant regulatory orders impact going concern. - ₹24.69 crore income-tax demand carried as unprovided contingent liability for five years
Major- An Income Tax demand of ₹24,69,01,615 for A.Y. 2010-11 to A.Y. 2016-17 has been treated as a contingent liability not provided for in books, with an appeal before the First Appellant Authority. A CIT(A) order dated 16.12.2024 restored all assessment orders to the assessing officer for fresh examination. The FY2021-22 auditor's report stated there were "no pending litigations impacting financial position" while the same report's CARO clause disclosed disputed income-tax dues with no amounts or forums. - Seven years of clean audit opinions, but filings show no internal audit system in FY2024 and FY2026
Major- The company received unqualified opinions for FY2020 through FY2026 with no Emphasis of Matter or Key Audit Matters in any year. The FY2025-26 and FY2023-24 auditor's reports state "The Company has no internal audit system commensurate with size and nature of its business," while FY2021-22 and FY2022-23 reports say it "does have" one. The disputed statutory dues table under CARO clause vii(b) is populated with amounts, periods, and forums for FY2020-21 through FY2025-26. - Filings name promoter-family entities as trade payables and receivables while all reports claim arm's length
Major- FY2022-23 trade payables included CITYON NANO TECHNOLOGY PVT. LTD. ₹69,55,719, SHASHWAT AGARWAL ₹1,29,47,375, and SUDHIR AGARWAL ₹66,99,850, while trade receivables included BANSAL SUPPLIERS ₹93,00,483.80. The notes state "No interest charged on amounts recoverable from parties". Every Board's Report from FY2021-22 through FY2025-26 asserts all related-party transactions were at arm's length and in the ordinary course of business. - Statutory auditor replaced mid-term for the second time in two years
Major- Rajani Mukesh & Associates resigned on 22.08.2023 citing poor health, less than a year after being re-appointed for a five-year term at the 18th AGM on 21st Sep 2022. Srivastava S & Co. was appointed to fill the casual vacancy for five years from the 19th AGM (FY2023-24). The FY2022-23 financial statements were signed by the resigning auditor on 27.05.2023, roughly three months before the resignation. - Revenue collapsed to near-zero, with the only disclosed stream being income on non-performing assets
Major- Revenue from operations fell from ₹99,840.98 thousand in FY22 to ₹25,868.71 thousand in FY23 for Sale of Products/Traded Goods, and Sales of Shares fell from ₹99,944.05 thousand to ₹850.70 thousand. Reported revenue was ₹0.00 in FY26, ₹0.08 in FY25, and ₹0.00 in FY24 (in ₹ crore). The company's significant accounting policy states income on non-performing assets is "accounted in year of realization". - Promoter faces unresolved SEBI penalty while board remuneration stays static, all resolutions pass unanimously
Minor- The SEBI penalty and attachment notices against Mr. Sanjay Kumar remain "still pending for action" as of FY2025-26. Managing Director Mr. Mukesh Kumar was re-appointed for 5 years effective 31 July 2024 at salary ₹20,000 per month, with no sitting fee for board meetings. Every shareholder resolution from FY2020-21 through FY2025-26 passed with 100% in favour and 0% against. - Zero depreciation in FY2022-23 and FY2021-22, with no deferred tax assets recognized
Minor- Gross depreciation was NIL in FY2022-23 and FY2021-22. The company states "Previous year's figures have been reworked, regrouped and reclassified wherever necessary" in FY2025-26 and prior years. Deferred tax assets are not recognized per the company's "conservative approach" policy in FY2022-23 and FY2021-22.
What to watch
- SEBI attachment of promoter accounts. Whether SEBI proceeds with attachment of Mr. Sanjay Kumar's bank and demat accounts, given the Notice was issued and the matter remains pending as of the FY2025-26 Annual Report.
- Assessing officer's fresh examination. Outcome of the re-examination of assessment orders for AYs 2010-11 to 2016-17, following the CIT(A) order dated 16.12.2024.
- AGM on 18.09.2026. Whether shareholders adopt the FY2025-26 audited financial statements at the AGM noticed on 21st Aug 2026.
- Internal audit system status. Whether the FY2026-27 auditor's report continues to state the Company has no internal audit system under CARO clause xiv, or reverts to the FY2022-23 position.
- Auditor tenure. Srivastava S & Co.'s 5-year term runs from the 19th AGM (21.09.2023) until the AGM for FY2027-28; any further mid-term change would be the third auditor change in the period.
Bottom line: This is a disclosed and audited record, but the disclosures themselves tell a story of a company whose revenue has collapsed to near-zero while a regulator's penalty against its promoter goes unpaid for six years and a ₹24.69 crore tax demand sits unresolved for five. The clean audit opinions are real, but they sit alongside filings that contradict each other on internal audit, related-party dealings, and pending litigation. Watch whether the SEBI attachment proceeds, what the assessing officer finds, and whether the internal audit system reappears in the next audit.