Allah, the Wise, has said:
وَ أَنْ تَعْفُوا أََقرَبُ لِلتَّقوَى
"And it is nearer to righteousness that you should relinquish." 
The Noble Prophet (s.a.w) said:
أََلعَفوُ لاَ يَزِيدُ الْعَبدَ إلاَّ عِزّاً.
"Forgiveness increases a person in esteem." 
Forgiving, despite possessing the strength (to retaliate) is of the conduct of the Prophets; pardon is when a person commits an offence or sin with respect to another, who in return not only forgives him, from within his heart, but also manifests his beneficence and kindness, externally.
How can one, who does not forgive others, expect to be forgiven by the Almighty Lord?
Allah cloaks every servant of his with forgiveness in this world and in the hereafter, and hence it becomes imperative for them to forgive and pardon one another. And if it so happens that someone - intentionally or unintentionally - does commit a malevolent deed, one should magnanimously and graciously disregard it in order that Allah too, by His favour, disregards one's own malevolence.
1 – Beating The Servant
Once, a companion of the Noble Prophet (s.a.w) began hitting his slave. The slave kept pleading: "By Allah! Do not beat me. For Allah's sake forgive me." The master, however, refused to pardon him and continued to shower beatings upon him.
Some people informed the Noble Prophet (s.a.w) of the slave's predicament whereupon he (s.a.w) got up and started out towards the scene of this incident. As soon as the companion's eyes fell upon the Noble Prophet (s.a.w) he stopped his beatings whereupon the Noble Prophet (s.a.w) said to him: "He placed you under the oath of Allah, but you refused to pardon him and now that you have set your eyes upon me, you have restrained yourself?"
The man, in order to make amends for his deplorable behaviour, said: "I now free him for the sake (and pleasure) of Allah!"
The Noble Prophet (s.a.w) said: "Had you not freed him, you would have dropped face-down into the fire of Hell."
2 – Pardon for the Killer
During the period of the leadership of the late Ayatullah al-Udhma Sayyid Abu Al-Hasan Isfahani, one night, as he led the congregation for the Maghreb prayers in Najaf-e-Ashraf, a person with a knife stabbed his son - an extremely admirable and exemplary person - to death.
When Sayyid Abu al-Hasan Isfahani was informed of his son's martyrdom, exhibiting great patience and forbearance he said: "There is no power or strength save with Allah" and then, standing up, he led the 'Isha prayers.
Later, when the people approached him and sought to know of the action he desired to initiate against his son's murderer, he simply said: "I have forgiven him."
3 – Freedom of the Slave-Girl
One day, some people had come to the house of Imam Sajjad (a.s) as guests. Preparing the meals, one of Imam's (a.s) servants hastily pulled out the kebabs from the oven; as he did so, the skewers of the kebabs slipped from his grasp, fell upon the head of Imam Sajjad's (a.s) child, who had been standing below the ladder, and caused his death. The servant stood aghast and terribly perturbed, but the Imam (a.s) said: "You have not done it on purpose. Go away, for I have freed you in the way of Allah." He then ordered that the child be given ablution, shrouded and buried.
Sufiyan Thauri relates: "One day, arriving in the presence of Imam Sadiq (a.s) I found him to be disturbed and unsettled. I sought to know the reason for it whereupon he (a.s) said: "I had prohibited everyone from climbing atop the roof of the house, however when I entered the house, I observed one of the slave-girls, who had been entrusted the responsibility of educating one of my children, standing atop the ladder with my infant in her arms. But as soon as she saw me, she was left dumbfounded and began to tremble as a result of which my son dropped out of her hands onto the ground and died. I am disturbed and uneasy over the fear that overtook the slave-girl because of me. Nevertheless, I told her: "There is no sin upon you and I have set you free for the pleasure of Allah.""
4 – The Son’s Pardon for the Killer
When the caliphate fell into the hands of the Abbasids, the Ummayad elders took to flight and concealed themselves - one of them being Ibrahim Ibn Sulaiman Ibn 'Abdul Malik, an old but wise and erudite person, who was eventually pardoned and granted protection by Abu al-Abbas Saffah - the first Abbasid Caliph.
One day Saffah said to him: "I would like to know what transpired with you during your period of concealment."
Ibrahim said: "I had concealed myself in Herah, in a place close to the desert. One day, from the roof-top I witnessed black flags advancing from the direction of Kufah. I assumed that they were coming for me and so fled from my hideaway and arrived in Kufah. There, perplexed and distressed, I wandered through the streets till I reached a large house. As I stood there I witnessed a person, seated on his horse and accompanied by a few servants, enter the house. The servants asked me: 'What is it that you desire?' I said: 'I am a person, who is fearful and alarmed, and have come to you for shelter.' They took me into the house, accommodated me in one of the rooms and entertained me in the most excellent of manners. Neither did they question me about myself nor did I ask them about the owner of the house, however, I observed that everyday the owner of the house would go out in the company of his slaves and return home after a period and so, one day, I inquired: 'Are you in search of someone that you go out everyday?'"
He said: "We are on the lookout for Ibrahim Ibn Sulaiman, who has killed my father, so that I can extract revenge for my father's murder." I realized that he spoke the truth for I had indeed killed his father. I said to him: "Since you have accommodated and entertained me, I shall guide you to your father's killer." With great urgency and impatience he asked: "Where is he?"
I said: "I am Ibrahim Ibn Sulaiman!"
Hearing this, he said: "You lie!"
I said: "By Allah! No, I do not. I killed your father on such and such day!"
Realizing that I spoke the truth his complexion changed and his eyes began to spew blood. He lowered his head towards the ground and then raising it after some time, said: "Since I had granted you shelter I shall not kill you, however, in the presence of the just Allah, I shall surely seek revenge for my father's murder. Hasten away from here for I fear lest you may suffer harm from me."
He offered me a thousand dinars but I declined and departed from there. O' Caliph! I declare with complete candidness that excepting you, I have not witnessed a person more beneficent than him.
5 – The Conquest of Mecca
When the Noble Prophet (s.a.w) conquered Mecca, he announced a general amnesty for all the people - except a few individuals, who were to be killed whenever found; amongst these were 'Abdullah Ibn Zab'ari, who used to satirize him (s.a.w), Wahshi, who had killed his uncle Hamzah in the battle of Uhud, 'Ikramah Ibn Abi Jahl, Safwan Ibn Umayyah and Habbar Ibn al-Aswad - all of whom he eventually pardoned after they were brought before him (s.a.w).
As for Habbar Ibn al-Aswad, he was the person who frightened Zainab - the Noble Prophet's (s.a.w) daughter, who had been sent towards Madinah by her husband, Abu al-Abbas Ibn Rabi' - on the way to Madinah as a result of which she suffered a miscarriage. Subsequent to this act of his, the Noble Prophet (s.a.w) had declared it permissible to shed his blood.
After the conquest of Mecca he approached the Noble Prophet (s.a.w), expressed regret over his misdeed and, seeking forgiveness, said: "O' Prophet of Allah! We were of the polytheists, however Allah, by means of you, guided us aright and delivered us from perdition, so disregard my ignorance and that which you have heard about me, and pardon me!"
The Noble Prophet (s.a.w) said: "I pardon you. Allah has exhibited kindness towards you in that He has guided you into Islam; with the acceptance of Islam, bygones become bygones."
 Suratul Baqarah (2), Verse 237
 Jami~ al-Sa~adat, vol. 1, pg. 368
 Tadhkeratul Haqa`iq, pg. 56
 Shanidani-ha-e-Tarikh, pg. 98; Mahajjah al-Baidha, vol. 3, pg. 445
 Sima-e-Farzanegan, pg. 336; Ganjina-e-Danishmandan, vol. 1, pg. 221
 Muntahal A~mal, vol. 2, pg. 4. It has been mentioned in Bihar al-Anwar, vol. 11 that Imam Sajjad (a.s) would summon all his slaves and slave-girls before him on the day of Eid al-Fitr, forgive their misdeeds, grant them gifts, fri some of them after which he would say to them: "Say to Allah: Forgive ‘Ali Ibn Al-Husain (a.s) just as he has forgiven us!"
 Ibid., pg. 128
 Pand-e-Tarikh, vol. 2, pg. 92; Thamarah al-Auraq Ibn Hijjah
 When Wahshi recounted the episode of the killing of his uncle, Hamzah, he wept profusely but then pardoned him and said: غَيِّب وَجهَکَ عَنِّي (Disappear from my sight).
 Shaytan, vol. 1, pg. 412 اَلاِسلاَمُ يَجُبُّ ماَ قَبلَهُ