As powers on land in the national capital are vested with the Centre, the office allotment to the ruling AAP was cancelled by Lt Governor Anil Baijal on Saturday, stating it was made in "clear violation" of rules.
Sources in the LG's office told PTI that Baijal had also sought opinion of the Public Works Department on the issue, which gave an opinion that the "accommodation was allotted violating the rules".
"The accommodation allotment to the AAP by the government was in clear violation of laid down rules as powers related to land in Delhi are vested with the Centre", a source said.
The allotment of the accommodation was one of the "irregularities" pointed out by a three-member panel, headed by V K Shunglu, constituted by the then LG Najeeb Jung to examine files related to the decisions taken by the AAP government.
On March 29, Baijal had also directed the Delhi chief secretary to recover Rs 97 crore from the AAP for advertisements projecting Chief Minister Arvind Kejriwal and the party, allegedly in violation of the Supreme Court guidelines.
In November 2015, the AAP government had approved a policy for land allotment to state parties.
The Kejriwal government then alloted a bungalow to the AAP on Rouse Avenue early last year. The bungalow was earlier alloted to Asim Ahmed Khan, the then Delhi Minister, who was sacked over graft charges.
Addressing a rally in Nangloi, Kejriwal said that he and his Cabinet ministers were being targeted by using the CBI.
"The LG and the BJP locked our party office. They want to close our office. They made the CBI raid my office. They only found me as the corrupt person in the country, but found nothing but four mufflers", Kejriwal said.
His deputy Manish Sisoda said his party has waged a war against the corrupt and the struggle would continue even if everything is taken away from them.
Hitting out at the LG and the Centre, senior AAP leader Sanjay Singh said the BJP was not allowing the AAP to work for the people in the national capital.
"I want to know, what is the personal enmity with Aam Aadmi Party? Why is the party being targeted and why this discrimination against us?
"I want to know whether a party which has got huge mandate from the people and won 67 out of 70 seats cannot have its office in the state?" Singh asked.
He said while the BJP has been alloted a bungalow on the Pant Marg, former LG Jung had also alloted land to the saffron party on DDU Marg, which was orginally earmarked for a school.
The BJP said allotment of an accommodation for office to AAP was a "criminal breach of trust and illegal encroachment of the property".
"No sanction was taken from the Urban Development Ministry, the authority concerned, before for the move. Land is not a subject for the Delhi government. Even the Delhi government's PWD has flagged the allotment proposal", Vijender Gupta, Leader of Opposition in the Delhi Assembly, said.
"Installation of furniture and electrical fittings made in the government bungalow was turned into party office on public expense. This was against the norms. PWD raised objections, but they were ignored by the Chief Minister", Gupta added.
AAP leader Ashish Khetan said, when "smaller parties" can have offices in the national capital, why can't a state party that has an overwhelming majority in the Delhi Assembly have the same.