The action was taken after Sharma misbehaved with the family of a slain BJP leader and Union Minister Smriti Irani chided the official for his behavior through a tweet.
Sharma has been put on the waiting list while Arun Kumar, vice chairman of the Moradabad Development Authority will take over as new district magistrate of Amethi.
The outgoing Amethi district magistrate Prashant Sharma had earlier misbehaved with the brother of deceased Vijay Kumar Singh a.k.a. Sonu Singh and a video of the entire incident went viral on social media. Locals also reacted strongly and called the behaviour of the official 'insensitive'.
The viral video showed Prashant Sharma held Sunil Singh by the collar and shoved him when he was protesting against the delay in post-mortem and arrest of Sonu's killer.
After the incident went viral on social media, Smriti Irani said, "We should always try to be humble and caring. We are here to serve people not to rule." She even tagged the district magistrate in her tweet.
Congress General Secretary Priyanka Gandhi Vadra posted the video on her Facebook page and asked, "what is this behaviour DM saheb? She also hit out at the government for DM Prashant Sharma's behaviour with the slain BJP man's kin.
Sonu Singh was shot dead in Bisundapur village in Amethi on Tuesday night over extortion.
The Amethi Police has registered a case of murder against three unidentified people in Gauriganj.
Sonu's father Shivnayak Singh is also a local leader of the BJP.
Sonu's brother Arpit Kumar Singh had accused Chandra Shekhar Kesarwani, Shubham Tiwari and three other unidentified persons in the complaint filed at Gauriganj police station after which an FIR was lodged.
This was the second controversy involving Sharma in the past one week. Sharma had arrived late for a court hearing in Amethi and the judge punished him by keeping him in custody till the evening.
( With inputs from IANS )