Musnad Abu Ya'la al-Mawsili 3:68

Ubayd Allah narrated to us, Uthman ibn Umar narrated to us, this sheikh also, Abu al-Muhayyah al-Taymi, narrated to us, he said: Abu Matar said: I saw Ali, and a man was brought to him, and they said: "He has stolen a camel." He said: "I do not see that you have stolen." He said: "Yes, I have." He said: "Perhaps it was made to appear so to you?" He said: "Yes, I have stolen." He said: "Take him, O Qanbar, and bind his finger, and kindle a fire, and let the butcher cut it, then wait until I come." When he came, he said to him: "Did you steal?" He said: "No." So he let him go. They said: "O Commander of the Faithful, why did you let him go when he had confessed to you?" He said: "I took him by his word, and I let him go by his word." Then Ali said: "The Messenger of Allah, peace and blessings of Allah be upon him, was brought a man who had stolen, so he ordered his cutting. Then he wept. It was said: 'O Messenger of Allah, why do you weep?' He said: 'And how should I not weep when my nation is being cut in your midst?' They said: 'O Messenger of Allah, would you not pardon him?' He said: 'That is an evil ruler who pardons regarding the prescribed punishments (hudud), but pardon one another among yourselves.'"