M.C. Agarwal, J.

1. BY this petition under article 226 of the Constitution of India, the petitioner challenges an assessment order dated January 31, 1994, passed under Section 147 of the Income-tax Act, 1961, (hereinafter referred to as "the Act"), and a preceding notice under Section 148 dated February 2, 1993.

2. WE have heard Sri Sudhir Chandra, assisted by Sri S. D. Singh, advocate, learned counsel for the petitioner, and Sri Shekhar Srivastava, learned counsel for the respondents.

The petitioner is doing the business of export of rugs and druggets. Under section 80HHC of the Act, profits derived by an assessee from the export of goods are to be excluded from its total income. The petitioner's assessment for the assessment year 1988-89 was initially made on March 16, 1989, in which no deduction under Section 80HHC was allowed in respect of interest amounting to Rs. 8,92,226 earned on fixed deposit receipts which was taken to the profit and loss account by the assessee. The Assessing Officer discussed the petitioner's claim as under :

"On a perusal of balance-sheet it shows that the assessee is having of F.D.R. of Rs. 32,55,000. In spite of specific queries, the assess