Narrated Anas bin Malik
A Jew passed by Allah's Messenger (ﷺ) and said, "As-Samu 'Alaika." Allah's Messenger (ﷺ) said in reply, "We 'Alaika." Allah's Messenger (ﷺ) then said to his companions, "Do you know what he (the Jew) has said? He said, 'As-Samu 'Alaika.'" They said, "O Allah's Messenger (ﷺ)! Shall we kill him?" The Prophet, said, "No. When the people of the Book greet you, say: 'Wa 'Alaikum.'"
Narrated `Aisha
A group of Jews asked permission to visit the Prophet (and when they were admitted) they said, "As- Samu 'Alaika (Death be upon you)." I said (to them), "But death and the curse of Allah be upon you!" The Prophet (ﷺ) said, "O `Aisha! Allah is kind and lenient and likes that one should be kind and lenient in all matters." I said, "Haven't you heard what they said?" He said, "I said (to them), 'Wa 'Alaikum (and upon you).