The alleged misappropriation of funds runs to the tune of Rs 40 lakh, they said.
The officer, attached to a Panchayat Samiti, is identified as Kasim Rizvi.
According to police, Rizvi had promised installation of towers to at least ten farmers in the taluka and assured them that they would earn Rs 40-45,000 as monthly rent.
"He had taken Rs 3-4 lakh from each of ten farmers as security deposit for the purpose," said Inspector, Palghar police station Nilesh Mainkar.
Mainkar did not elaborate on the time period when the alleged cheating took place.
Rizvi was booked under section 420 of IPC (offences relating to cheating and dishonestly inducing delivery of property.
He was transferred to Vikramgadh as Sub Block Development Officer but was apprehended before he could take charge.
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