First, we must understand that it is impossible for Allah to lie, and that this is the position of the `ulamā’ in this matter. It is written in “al-Bidāya fī Uṣūl-id-Dīn”:
أنّ الظلم والسفه والكذب، هل هي مقدورة لله تعالى أم لا؟ فعندنا هي مستحيلة؛ لا يوصف الله تعالى بالقدرة عليهما
Oppression, foolishness, and lying – are they under Allah’s power or not? According to us, they are impossible; Allah cannot be characterized with having power over them. (al-Bidāya fī Uṣūl-id-Dīn, al-Qawl fī Aṣḥāb-il-Kabā’ir, Faṣl, pg. 83, al-Maktabat ul-Ḥanafiyya, Damascus)
The incomparable researcher al-Kamāl ibn-ul-Hummām writes:
يستحيل عليه سبحانه سمات النقص كالجهل والكذب بل يستحيل عليه كل صفة لا كمال فيها ولا نقص لأن كلا من صفات الإله صفة كمال
It is impossible for Him [to have] characteristics of defect, such as ignorance or lying, rather, it is impossible for Him to have any quality which has neither perfection nor defect because all of the Divine Attributes are perfect. (al-Musāmara bi Sharḥ-il-Musāyara, al-Khātima, an-Naẓr uth-Thālith, al-Mas’alat ul-Rābi`a, pg. 362, DKI Beirut, 2002)
Some people assert that this contradicts Allah’s Omnipotence, but it has nothing, in fact, to do with His Power and everything to do with the inability of defects and flaws to attach themselves to that Power. `Allāma Faḍl-ur-Rasūl Badāyūni writes:
لا قصور أصلا في عدم تعلّقهما بهما، بل القصور في التلّق إذ يلزم عليه حينئذ أن يجوز تعلّقهما بإعدام أنفسهما وإعدام الذات العالية وإثبات الألوهية لما لا يقبلها من الحوادث وسلبها عن مستحقهما جل وعلا، فأي قصور وفساد ونقص أعظم من هذا؟
There is no fault on the part of [His Will and Power] in not attaching to [things that are absolute or impossible (like lying)]; rather, the fault lies with the attachment itself. This is because if we were to consider such attachment possible, it would lead to the possibility of [that Will and Power] willing themselves into non-existence, or willing the Divine Essence into non-existence, or establishing divinity for members of creation that cannot accept it, or removing [that divinity] from He Who is truly fitting for it. What fault, perversion, or defect could be worse than this? (al-Mu`taqad ul-Muntaqad, al-Bāb ul-Awwal, pg. 25, Raza Academy, Bombay, 1999)
This text is basically telling us that considering the possibility of things such as lying for Allah would open the door to a host of highly problematic issues concerning the Divine Reality and proper belief that would certainly lead to disbelief.
As for the ruling of such a person, the `ulama have held that he would be considered a disbeliever. This is the ruling according to the jurists. However, we still avoid calling such a person a disbeliever out of caution, following the majority of the theologians. The Honorable Imām Aḥmad Raza Khān was asked:
کیا فرماتے ہیں علمائے دین و مفتیان شرع متین اس مسئلہ میں کی ۔۔۔ایک کہتا ہے کہ اللہ تعالٰی جُھوٹا ہو سکتا ہے
What do the scholars say about someone who says that Allah can lie?
The Imām writes in response:
یہ قول صریح ضلالت و گمراہی و بد دینی ہے۔۔۔فقہائے کرام کے طور پر ایسی ضلالت کا قائل صریح کافر ہو جاتا ہے اگر ہم باتباع جمہور متکلمین کرام صرف لزوم پر بے التزام کافر کہنا نہیں چاہتے اور ضال مضل بددین کہنے پر قناعت کرتے ہیں
This statement is clear misguidance, deviance, and blasphemous in nature. According to the jurists, someone uttering this type of misguidance clearly becomes a disbeliever, even though we follow the majority of the theologians in that we say that he should not be called a disbeliever because there is no absolute liability, and that we are content with calling that person misguided and deviant. (Fatāwa Riḍawiyya, 30 Vol Ed, Kitāb-us-Siyar, Vol 15, pg. 451-2)
After understanding this issue, if someone still chooses to believe that lying is possible for Allah, then that person would still not necessarily be considered a disbeliever, but he would certainly be considered misguided and deviant. Socialization with such a person, no matter his personal relationship, should be avoided until he gives up that belief and repents to Allah.
Allah knows best.