Riyad Us-Saliheen (Gardens of the Righteous)

Chapter 261
Falsehood that is Permissible

The learned compiler of this book has put forth some arguments to prove that it is lawful to tell a lie under the stress of circumstances. An example of this is the case of a Muslim who hides himself or his money from a tyrant who is bent on killing him or taking his money from him. If one knows the whereabouts of this Muslim or his money and is asked about it, it is permissible to lie in this case to save a Muslim's life or his property, but it is better to give an equivocal answer, that is one which is not clear or definite in meaning, and that can be interpreted in more than one way in order to shun lying altogether. The sum and substance of discussion has been derived from the narration ascribed to Umm Kulthum (May Allah be pleased with her). She said: The Messenger of Allah (PBUH) said, "A liar is not the one who tries to bring about a reconciliation between the people and speaks good to avert dispute or to convey good.'' 
[Al-Bukhari].

It may be concluded that falsehood is permissible in the following three cases:

(i) While fighting Jihad in the Cause of Allah.

(ii) To conciliate between people.

(iii) For the husband to please his wife and the wife to please her husband.