Ezekiel 18:24 may shed possible light on Jesus's words when He says, "I never knew you." in Matthew 7:23.
Ezekiel 18:24 says that if a righteous person does iniquity (sin), all their previous righteousness will not be remembered. Seeing God associates with the righteous, he will no longer remember them anymore. It will be as if He... never knew them. For there is nothing to remember because no previous righteousness exists anymore.
It is worth taking note that the reason why Jesus told them to depart from Him was not because they did many wonderful works, but it was because they worked iniquity (sin).
"And then will I profess unto them, I never knew you: depart from me, ye that work iniquity." (Matthew 7:23).
Even if Ezekiel 18:24 was not a proper explanation on Matthew 7:23, this does not mean that the Bible does not teach elsewhere that a believer cannot be condemned by sin. See...
Matthew 5:28-30
Matthew 6:15
Matthew 12:37
Matthew 25:31-46
Luke 9:62
Luke 10:25-28 cf. John 14:15, and 1 Corinthians 16:22
In fact, we know that Adam committed one sin that led to the fall of all of mankind. His one sin had a hugely bad impact. Adam was told that he would die that day he sinned. But he did not die physically, but he died spiritually. This means Adam needed to get his heart right with God in order to have spiritual life again. We also learn that Ananias and Sapphira each committed the sin of lying to God and a great fear came upon the church and all who heard of it. This means that they died spiritually for committing a one time sin. For the emotion of fear only makes sense to believers if they know that they could also potentially commit a serious sin that could condemn them, too. For Paul says to live is Christ, and to die is gain. Jesus said fear not the one who can kill the body, but fear the One who can destroy both body and soul in Gehenna (i.e. the Lake of Fire). So believers are taught not to fear death.
In Matthew 7:23, I believe these are believers but they believed in a wrong version of Jesus in that they thought they could sin and still be saved. Whether they always believed that way is unclear.
But they cast out demons in His name. This means they believed in Jesus. It is just not the same Jesus as described in the Bible. Yes, sure, they may even say they followed the Bible, but I believe they twisted and distorted Scripture to justify sin and evil (on some level) thereby creating their own version of Jesus (Whereby the real Christ did not know them).
Jesus says "I never knew you" because they were calling Him "Lord Lord" as if He was their lord when He never was. The had just been using His name in vain.
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