http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/66342/index.do 
Lauzon v. The Queen (January 9, 2014 – 2014 TCC 3) involved assessment for unreported sales and rental income, including taxes, interest and penalties. The appellant’s argument basically boiled down to the allegation that he had made cash purchases of inventory which should operate to reduce the amounts assessed:
[5] The appellant acknowledges that there were unreported furniture sales and rental income. His challenge is based on three points only:
(a) He submits that he is entitled to additional deductions for the cost of goods sold, in particular:
(i) $109,765 in 2002 and $89,119 in 2003, amounts paid to Futon International Inc. for the purchase of furniture;
(ii) $40,023 in 2002 and $30,683 in 2003, amounts paid to Distribution Mago Inc. for the purchase of furniture.
According to the appellant, the amounts were allegedly paid in cash and were not claimed by the appellant in his income tax returns.
(b) He submits that no penalty is warranted.
(c) He submits that his income should be reduced by $11,751, because it is a clerical error on the part of the accountant in 2003.
[Footnotes omitted]
The case contains an extensive review of the evidence but ultimately the court simply rejected the appellant’s evidence:
[81] I do not believe the appellant and do not accept his evidence for the following reasons.
[82] First, as I stated in the beginning, I accept the result of the liquidity test, a result that is not contested. Accordingly, I cannot believe the appellant when he submits that he made additional purchases of $149,788 in 2002 and $119,802 in 2003. This is mathematically impossible.
[83] Second, there is a major contradiction between the appellant, Ms. Houle and Mr. Vincent. According to the appellant, the general procedure for purchases from Futon was to bring to Futon a sheet of paper prepared by Ms. Houle and, once there, Mr. D’Amico prepared the purchase order. However, according to Mr. Vincent, Ms. Houle faxed the purchase order to Futon and he brought a copy. Finally, according to Ms. Houle, the general procedure was that she would place the purchase order over the telephone with Futon, that Futon would fax her the purchase order document when the furniture was ready and that the driver of the truck would bring the document with him to Futon. It is not possible that the three different procedures all constituted the general procedure.
[84] Third, a majority in value of the amounts claimed and contained in the documents in Exhibits A-2 to A-5 cannot be valid in the absence of cash to make the purchases. When I look at the documents and consider all the appellant’s evidence, I do not see anything that would allow me to conclude that some of the documents (i) are clearly separate from the majority in value and (ii) represent valid purchases resulting in additional deductions.
[85] Fourth, Mr. D’Amico and Mr. St-Pierre both testified that their respective firms reported all their sales. I accept both testimonies.
[86] Accordingly, the appellant has not shown that he made additional purchases.
The court dismissed the appeal, including the appeal of penalties, with the exception of a clerical error of $11,751 which was established by the evidence of the taxpayer’s accountant.