Where had the stone and mortar used by Montresor to wall up the entrance to the niche been hidden?

It was not actually necessary for Montresor to hide the stones or the mortar, since he was the only one who ever came down there. If Fortunato were to notice them he would think nothing of them, only that some repair work was being done. But Fortunato doesn't even notice them. The building stones and the trough of mortar had been covered with human bones, mainly to keep the mortar moist. Water continually drips down onto the bones and seeps into the mortar. Montresor had to have it already mixed, but he didn't know when he was going to be able to use it. Poe wanted to have the stones and damp mortar readily available because he wanted to make the wall-building as quick and easy as possible. Evidently he does not leave his trowel with the building materials because it would quickly rust in that environment. This is not dramatic, and Poe wanted to keep his story dramatic. Poe also specified that the niche in which Montresor chained Fortunato was very narrow. This, of course, made it easier to build the stone wall. Here is how Montresor describes the materials:

As I said these words I busied myself among the pile of bones of which I have before spoken. Throwing them aside, I soon uncovered a quantity of building stone and mortar. With these materials and with the aid of my trowel, I began vigorously to wall up the entrance of the niche.

Notice how he says the word "vigorously" in order to show that the wall is going to be constructed very quickly. 

And here is how Montresor describes the crypt or recess:

Within the wall thus exposed by the displacing of the bones, we perceived a still interior crypt or recess, in depth about four feet, in width three, in height six or seven. It seemed to have been constructed for no especial use within itself, but formed merely the interval between two of the colossal supports of the roof of the catacombs, and was backed by one of their circumscribing walls of solid granite.

Note that the recess had to be at least four feet deep. Fortunato would be chained tightly against the rock wall. He could only reach out three feet in front of him, so he could not interfere with the building of the wall, and he could not try to knock it down after Montresor left him alone and the mortar was still wet.

Montresor is using stones rather than bricks because he wants the wall to have a rougher appearance after he plasters the whole outside of it with the same mortar he uses for building the wall. Fortunato is confined within a very narrow recess. It is only about three feet wide. We can assume that Montresor's experience in wall-building is limited. He only has to build a wall three feet wide and six or seven feet tall, and it will be supported on both sides by the sides of the recess. That is an area of around twenty square feet. If the stones are roughly a foot square, that means he only has to lay something like twenty stones. Poe is such a smooth writer that he makes the wall seem to go up in minutes.