This story is in either "Fantasia Mathematica" or "The Mathematical Magpie", both edited by Clifton Fadiman. I don't have my copies here to check, but a look at the table of contents suggests that it might be "The Hermeneutical Doughnut", by H. Nearing Jr. (Even if it's not, it's worth picking up the books to look; anyone who liked this story is guaranteed to like them.)

EDIT: Sorry; on looking closer, it's clearly Gardner's "The No-Sided Professor" (http://en.wikipedia.org/wiki/Fantasia_Mathematica).