Thin films of Al-based hematite iron oxide were synthesized by spray pyrolysis in aqueous  medium onto the glass  microslides. The compact and homogeneous distribution of grains (spindle-shaped hematite nanostructures) with varying sizes has been observed in surface morphological studies. The room temperature Mossbauer study has been carried out to monitor the local environment around Fe cations and valence state of Fe ions. Mossbauer and micro-Raman (low  temperature) results suggest that oxygen vacancies cause cation redistribution between the interstitial sites resulting in magnetic ordering. The variation of magnetoresistance in low magnetic field (<3 kOe) is also reported.