The Crocodile Dundee star, his artistic partner John Cornell and their financial adviser Tony Stewart have been accused of hiding tens of millions of dollars from the tax office in offshore companies.
Stewart is being prosecuted for refusing to disclose information about the trio in an interview with the ATO earlier this year.
But Stewart has argued that forcing him to answer questions about the matter is an unlawful breach of his professional privilege, or "accountant's concession", and that private accounting files seized by the Australian Crime Commission (ACC) were protected by this privilege.
He has asked for any documents held by the ATO be destroyed and for any staff who have seen them to be taken off the case.
In the Federal Court on Tuesday, his barrister Michael Abbott QC accused the ATO of illegally or unlawfully using documents provided by the ACC in their case against the men.
He said the ATO had only applied for the documents officially once Stewart had claimed privilege, "to give a veneer of respectability to what was otherwise indefensible material".
"We have acted to our detriment on the basis of the representations made by the tax office," Mr Abbott said.
"Had we known that the tax office's attitude was that the guidelines never applied to this material, then a challenge would have been made much earlier."
But the ATO's barrister Jeffrey Hilton SC said Stewart's allegations were "bizarre and baseless".
"We did not act illegally ... we did not act unlawfully ... and finally we submit that we did not act contrary to the accountant's concession because it did not apply," Mr Hilton said.
Stewart's application could not be granted by the court because it would prevent the ATO's commissioner from being able to do his job, he said.
"Since this case started, what the applicant studiously and deliberately has sought, without demur, has been a permanent injunction and relief restraining us ever from dealing with this material," Mr Hilton said.
"That has been repeated and repeated and repeated ... (but) no court in Australia would ever grant such relief.
"(It) would prevent the commissioner from doing his job for ever."
Justice Nye Perram has adjourned the matter while he considers his judgment.
aap 10 Nov 2009
Where the A.T.O is ABOVE the law.
Illegally obtained evidence is considered null and void (inadmissible).
Harassment from the VERY TOP.
BUT DRUG SYNDICATES ARE LEFT ALONE.
Not the first time NOR the last time a government has done something illegal,
BUT there will be NO punishment against the people concerned, just a cover up.