http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/72943/index.do 
Dryden v. The Queen (July 29, 2014 – 2014 TCC 241) was a very lengthy (109 paragraphs) decision involving a net worth assessment of Mr. Dryden for the 2003-2006 taxation years. The reasons for judgment contain a very thorough and detailed analysis of all of the accounting and factual issues presented by the parties. For the purposes of this blog it is probably sufficient to set out the original expenditures forming part of the assessments and the concessions made by the Crown at trial, largely based on inter-account transfers:
2003
Expenditures as reassessed $103,597.00
Less concessions
Citizenship & Immigration $(4,600.00)
Transcription errors $(982.13)
Expenditures after the concessions $98,014.89
2004
Expenditures as reassessed $378,991.79
Less concessions
Gareene Home $(106,000.00)
Inter-account transfers $(99,000.00)
Expenditures after the concessions $173,991.79
2005
Expenditures as reassessed $203,312.52
Less concessions
Inter-account transfers $(99,000.00)
Plus
Excess payment on the Gareene Home $26,511.33
Expenditures after the changes $130,023.85
2006
Expenditures as reassessed $108,021.09
Less concessions
Inter-account transfers $(7,186.38)
Expenditures after the concessions $100,834.71
These expenditures were further reduced by the court by $11,000 in 2004 and $25,000 in 2005 based on additional inter-account transfers.
The court also dealt with the liability side of the equation which, together with the expenditures, resulted in income inclusions on the net worth basis. There the court rejected most of the appellant`s arguments allowing only minor adjustments to cash on hand and rejected the evidence of loans from the appellant`s father.
The court permitted the opening of the 2003 taxation year (which was otherwise statute-barred) on the basis that the failure to report any income was an example of wilful default. It also approved the imposition of gross negligence penalties, subject to the adjustments in the amounts assessed arising from the reasons for judgment. A similar result obtained in the GST appeal that was heard together with the income tax appeal.
As a result the appeal was allowed but with costs to the respondent.
Comment: The costs award in favour of the respondent may be a bit harsh in light of the fact that the expenditures (and, accordingly, it would seem the assessments) appear to have been reduced by approximately $350,000 (roughly 43%) (even excluding some minor adjustments to liabilities which also favoured Mr. Dryden). While most of the reductions were concessions made by the Crown, Mr. Dryden had to go to court to get those concessions.
Under the circumstances no award of costs would likely have been more appropriate.