The High Court has been told their are no reasonable grounds for believing Newcastle United have been involved in tax fraud.
However, the court was told that there was a basis for evidence showing that Newcastle were 'knowingly involved' in a multi-million pound tax fraud when the club offices were raided.
St. James' Park and West Ham United's ground were raided in April by the HM Revenue and Customs.
Tax officials seized documents from the club, which officials are challenging.
Richard Lissack QC, appearing for NUFC, said: "There were no reasonable grounds for believing Newcastle was engaged in suspected tax fraud."
The QC also argued that the measures taken by the government officials were unnecessary and less drastic actions could of been enacted to retain the information.