Mr Hassan, a respected Islamic teacher, was picked up by the guards in the evening “for questioning” but was allegedly killed.
A source in the community told BBC Hausa, That Mr Hassan was arrested by five members of the group a few minutes after 4 p.m. on Tuesday.
“Yesterday in the evening some of them came on motorcycles. We were told they were members of the group from Tsafe (another local government area). They teamed up with some of their colleagues here in Mada and asked Malam to follow them for investigation.
“We didn’t suspect anything because they were in a friendly mood and made everyone believe that it was just a normal investigation. But when they went out of the community, they stopped, slaughtered him like a ram and left his dead body there,” the BBC Hausa source, who was anonymous, said.
Terrorists have been active in Zamfara and other North-west Nigerian states for over a decade that had led to the death or displacement of hundreds of thousands of people.
The terrorists, who mostly live in the forests, procure information from residents about the movements of security agents and rich people in the community to attack.
Suspected informants have been arrested by both conventional and unconventional security agents but several innocent people have also been wrongly tagged as informants.
This is the second time the guards have killed an influential person in the state over allegations of supporting terrorists.
Newsmen reported last month how a traditional title holder in Yandoto, Magaji Lawali, was also picked up and later killed by the guards.
Sources in Mada, who asked not to be named for security reasons, told journalists that the deceased had a long-running battle with a member of the CPG in the community.
“The Malam (Mr Hassan) was not arrested with any exhibit, he was never associated with the terrorists. His only offence was when Malam intervened when some innocent youths who were arrested by Yan Sakai were about to be killed.
“Malam and some elders in the community, including the district head, stood for the two boys and they were released. The boys were arrested by the vigilante members (before the formation of CPG) while they were returning from the South-west where they went to do some menial jobs to get money,” he said.
The source, who said, the situation has thrown the community into confusion, insisted some of the CPG members who were part of the vigilante group, were unhappy with Mr Hassan.
Commenting on BBC Hausa on the development, the commander of the CPG in the state, Rabiu Yandoto, said the state government and the group would take action against those who killed Mr Hassan.
“We have ordered that all the CPG members around Mada should be brought forward so that we can make a comprehensive investigation into the killing.
“We have not given order to any of our members to arrest any person and kill. We are not made to kill people because we are not supposed to take laws into our hands,” he said.