Praise be to Allah, and peace and blessings be upon our Master, the Messenger of Allah.
After researching the books of the prophetic tradition (Sunnah), it has been found that the narration in question was reported by Al-Bukhari in his Sahih from the hadith of Aisha with the wording: "Whoever among you worshipped Muhammad (peace be upon him), then indeed Muhammad (peace be upon him) has died. But whoever worshipped Allah, then Allah is Ever-Living and does not die." It was also narrated by Ibn Majah, Ahmad, Al-Tabarani, Ibn Hibban, Al-Bayhaqi, and Ibn Rahwayh through various chains from Aisha and Ibn Abbas, may Allah be pleased with them both, without the additional phrase "in the sky."
This narration was also reported by Al-Bukhari in [Al-Tarikh Al-Kabir] from Ibn Umar, may Allah be pleased with them, with the wording: "Whoever worships Muhammad, then Muhammad has died. But whoever worships Allah, then Allah is in the sky, Ever-Living and does not die." However, in its chain of transmission is Muhammad ibn Fudayl ibn Ghazwan, who, although considered reliable by some hadith scholars, has been criticized by others. Al-Dhahabi quoted Abu Hatim as saying he made many mistakes, and Ibn Sa'd mentioned that some do not consider him reliable. This can be found in [Man Tukullima Fihi Wa Huwa Muwathaq ], p. 167.
This weakening of the chain lowers its rank, so the additional phrase in the hadith of Ibn Umar is not accepted, especially when compared to the hadith of Aisha in Sahih Al-Bukhari, which does not include this addition. This addition was not narrated by the other transmitters, nor was it relied upon by the major scholars of hadith in their authentic collections, like the Sahih, Sunan, and Musnad compilations. It was only mentioned in a biographical work, [Al-Tarikh Al-Kabir] by Imam Al-Bukhari, which is known to focus on biographical details of narrators rather than providing narrations for the purpose of legal or theological proof.
The scholars unanimously agree that the verses and hadiths that may superficially suggest that Allah is "in the sky" should not be understood in a literal sense that implies the sky surrounds Him, Glorified and Exalted. The belief of Ahl al-Sunnah wa al-Jama'ah is based on the principle of Tanzih (Declaring Allah free from any imperfections), which includes denying that the Lord of the worlds is attributed to place and time, as both are created. It is neither religiously nor logically correct for the created to be a place for the Creator.
Imam al-Tahawi, in his well-known book "Al-Aqida At-Tahawieh", stated: "Indeed, our Lord, Glorified and Exalted, is described by the attributes of oneness and characterized by the qualities of uniqueness, and there is none in His meaning among the creation. He is exalted above limits, boundaries, limbs, and instruments. He is not encompassed by the six directions like other created beings."
Indeed, upon examining the text of the narration with the added phrase "in the sky" — assuming its authenticity — the context of the event suggests that the term "sky" (or "heaven") is being used metaphorically, signifying the exalted status and absolute power of Allah. Sayyiduna Abu Bakr intended to reassure the people, unify their ranks, and help them cope with the severity of the situation by reminding them of the nature of humans, who are subject to life and death, and the grandeur of Allah, His dominion, His transcendence, and His everlasting nature. Thus, the phrase "in the sky" should not be understood literally but as a metaphor for Allah’s supreme authority and elevation above creation. And Allah The Almighty knows best.