a particular person and said, “Allah Most High created Adam in his image,” meaning that Adam’s form was exactly like that of this person, with no difference whatsoever. This explanation dispelled the misconception of those who imagined that Adam (peace be upon him) had a form other than this.
The second approach is to take the pronoun as referring to Adam (peace be upon him). This is the most appropriate of the three approaches, since a pronoun must refer to the nearest antecedent. In this hadith, the nearest antecedent is Adam (peace be upon him), so it is more appropriate for the pronoun to refer to him.
On this approach, there are several interpretations of the report. The first is that Allah Most High had exalted Adam’s status, making him the one before whom the angels prostrated; then Adam committed that lapse, yet Allah Most High did not punish him