Shri Dashrathbhai Prahladbhai Patel,, v. The Income tax Officer,,

ITA 33/AHD/2004 | 2000-2001
Pronouncement Date: 16-07-2010 | Result: Allowed

Appeal Details

RSA Number 3320514 RSA 2004
Assessee PAN ABBPP4910E
Bench Ahmedabad
Appeal Number ITA 33/AHD/2004
Duration Of Justice 6 year(s) 6 month(s) 11 day(s)
Appellant Shri Dashrathbhai Prahladbhai Patel,,
Respondent The Income tax Officer,,
Appeal Type Income Tax Appeal
Pronouncement Date 16-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 16-07-2010
Date Of Final Hearing 13-07-2010
Next Hearing Date 13-07-2010
Assessment Year 2000-2001
Appeal Filed On 05-01-2004
Judgment Text
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