A secretive inquiry probing the activities of Australian special forces in Afghanistan is investigating allegations an SAS member gunned down an Afghan businessman and then planted a pistol on the body to make it look like self-defence.

The incident is one of a growing list of killings that are being examined by the Inspector General of the Australian Defence Force's inquiry, which is being overseen by New South Wales Supreme Court judge Paul Brereton.

In April 2011, SAS members raided a warehouse in the capital of Uruzgan Province, Tarin Kot, and shot dead prominent businessman Hayat Ustad.

After the incident, the ADF said Ustad was a highly influential member of the Taliban and had been involved in arms smuggling, bomb-making and the transportation of fighters.

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The ADF also said Ustad had been trying to escape and pulled a pistol on the Australian troops, and had been shot dead in self-defence.

However, a friend of Ustad, Mohammad Hassan, who was at the warehouse when he was killed, told a reporter from the ABC's Four Corners in 2011 that when the Australians arrived they asked who the manager of the warehouse was.

Mr Hassan said that when Ustad raised his hand and said, "I am", an Australian soldier led him out of sight and then shot him dead.

Mr Hassan said Ustad was not armed and was not trying to flee.

The then-governor of Uruzgan province, Muhammad Omar Shirzad, told Four Corners that neither the Afghan intelligence services nor the police had any information that Ustad was a Taliban member.

A senator in Afghan's national parliament, Heela Achakzai, said she believed Australian special forces had been fed false intelligence by a business rival of Ustad's.

The ABC understands the IGADF inquiry is now examining allegations that a pistol was planted on Ustad's body immediately after the killing to create the illusion it was in self-defence.

The inquiry has all the powers of a royal commission, such as the ability to compel people — including non-Defence Force members — to answer questions.

Although it was initially constituted to examine "rumours" surrounding the conduct of Australian special forces in Afghanistan, the ABC revealed recently it was probing a number of specific allegations, including the killing of at least two children.

An Australian special forces veteran recently told the ABC the use of so-called "drop weapons", usually pistols carried to plant on Afghans who had been shot dead, was at the very least discussed by Australian special forces soldiers in Afghanistan. Other sources have confirmed this.

A recent investigation by the Sunday Times newspaper in Britain revealed the Royal Military Police were examining a number of allegations about British SAS members in Afghanistan, including that they planted weapons after murdering unarmed Afghans.