Advocates Hrishikesh Mundergi and Shreyansh Mithare, Khanna's lawyers, were arguing before the sessions court for his bail.
According to the CBI, Sheena was picked up by her mother and the prime accused Indrani Mukerjea -- Khanna's former wife -- at around 6.30 pm that day, whereas Khanna had reached a Mumbai hotel where he was to stay at 6.04 pm, the lawyers said.
It was impossible for Khanna to reach the spot where Indrani and Sheena were in such a short time, they said.
There was no 'meeting of minds' between Khanna and Indrani to hatch the conspiracy, the lawyers added.
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A key witness who saw the body being disposed of emerged three years after the incident, they said.
Witnesses identified Khanna because his face was all over the media, his lawyers said.
The prosecution is likely to put forth its arguments tomorrow.
Her former driver Shaymvar Rai has turned approver.
Referring to reports of purported conversation among
Indrani, Peter and Rahul suggesting that there has been attempts by Peter to cover up and mislead Rahul about the mysterious disappearance of Sheena, the court said if the CBI feels that anybody is doing intentionally then it can go ahead and take action against them (media).
Indrani, her former driver Shyam Rai (who has now turned approver in the case) and Khanna had allegedly strangled Sheena (24), Indrani's daughter from an earlier relationship, inside a car in April 2012.
Sheena's body was found in a forest in Raigad. The crime, which came to light in August last year, is allegedly linked to certain financial dealings.