Gilan Sharon, had refused to answer questions regarding a $1.5 million loan which he received from a South African businessman, Cyril Kern in 1999.
Kern has been described as a personal friend of the prime minister.
The money was said to have been used to pay back illegal party contributions in an attempt to cover their tracks.
A lower court had denied Gilan Sharon the "right to remain silent" and not to hand over financial documents, but his appeal against the ruling was upheld by the district court.
The prime minister brushed off corruption allegations against his family at a news conference last January, saying they were "scornful libel" while he himself refrained from answering several questions.