Identify given parameters

From the question, we are given the simple interest $SI = \text{₹}480$, time period $T = 3\text{ years}$, and annual rate of interest $R = 16\%$.

$SI = 480, T = 3, R = 16$

Recall the Simple Interest formula

The formula for simple interest is $SI = \frac{P \times R \times T}{100}$. Rearranging this formula to solve for the principal $P$, we get:

$P = \frac{SI \times 100}{R \times T}$

Substitute the values

Substitute $SI = 480$, $R = 16$, and $T = 3$ into the rearranged formula:

$P = \frac{480 \times 100}{16 \times 3}$

Calculate the final principal sum

Multiply the numerator and denominator: $16 \times 3 = 48$, so $P = \frac{48000}{48} = \text{₹}1000$.

$P = 1000$