Treating it as a sensitive issue, the GDA has referred the matter to the Uttar Pradesh government.
"We have referred the matter to the government after the land was found in the river conservation zone/river front development area, which is an integral part of the flood plains to conserve the Hindon river," said GDA official Ishtiyaq Ahmad.
An expert said the group housing project was planned in a highly fragile area of the river, a tributary of the Yamuna.
"The river conservation zone is a highly fragile area. No authority can change the Master Plan," said environmentalist Akash Vashishtha.
He said the GDA had submitted an affidavit for time-bound action before the National Green Tribunal (NGT) in June 2013 that it shall identify and demolish structures found in the flood plains of the Hindon river.
"Three years have passed and not a single structure has been dismantled by the GDA," he said.
Vashishtha said the GDA had earlier rejected the application for a group housing project, but had again proposed its reconsideration.
Rahul Yadav, owner of 11,510 square metres of land in Muhiddinpur Kinaoni village on the river conservation zone, had applied to change the land from a river conservation zone to a residential area and said he would pay the requisite fee.
A technical committee was set up and asked to submit a report.
The Uttar Pradesh irrigation department, meanwhile, gave a 'No Objection Certificate' despite the land falling in the flood plains within 200 metres of the embankment.
But an expert said it won't be easy for the government to overcome the opposition to the project.