Upvote:2
On what basis did Mormon Prophet Joseph Smith deny that God the Father, the Son and the Holy Spirit cannot indwell a believer?
As others have pointed out in the comments, Joseph Smith did not say that the Holy Spirit cannot indwell a believer, only that the Father and the Son cannot. Doctrine and Covenants 130:3 that you quoted says "the idea that the Father and the Son can dwell in a manβs heart is an old sectarian notion, and is false." No mention is made here of the Holy Spirit.
With that established, your supposition
It is my opinion on this is since Smith and his followers believe that God has a body of flesh and bone and cannot be everywhere present at the same time therefore God cannot indwell a believer.
seems a reasonable explanation for why Joseph Smith would teach that the Father and the Son (both held by Joseph Smith to be embodied Beings) cannot dwell in a person's heart.
Off the top of my head, I cannot think of any other scripture that could be used as a basis for this, other than the passages (including Joseph Smith's own accounts of seeing the Father and the Son) stating further that the Father and the Son have bodies. I would welcome any additional exposition people have to add to my answer.
Upvote:2
On what basis did Mormon Prophet Joseph Smith declare that God the Father, the Son and the Holy Spirit cannot indwell a believer?
The scripture you quote is from Doctrine and Covenants which is
a collection of divine revelations and inspired declarations given for the establishment and regulation of the kingdom of God on the earth in the last days.1
So if you take the Doctrine and Covenants as the word of God as members of the Church of Jesus Christ of Latter-day Saints do, then this isn't just a random person saying these things, but a prophet of God who received revelation or inspiration on John 14.
The definition of sectarian from 1820:
one of a party in religion which has separated itself from the established church, or which holds tenets different from those of the prevailing denomination in a kingdom or state.
As Joseph Smith is the prophet of the restoration (according to the Church of Jesus Christ of Latter-day Saints), Joseph was saying that the belief that "the Father, the Son and the Holy Spirit" can dwell within a believer is one of the tenets that differed from those taught in the original church from when Christ was on the earth.