PayPal IPN failed even from PayPal Simulator

I tried using PayPal's Sandbox IPN Simulator to send some test payments and still the IPN log says IPN was failed. I tried getting into Profile > Selling Tools > Language Encoding > Changed to UTF-8 still no use. IPN Log says

[09/11/2014 10:02 PM] - FAIL: IPN Validation Failed.
IPN POST Vars from Paypal:
residence_country=US, invoice=abc1234, address_city=San Jose, first_name=John, payer_id=TESTBUYERID01, shipping=3.04, mc_fee=0.44, txn_id=222972945, [email protected], quantity=1, custom=xyz123, payment_date=04:59:06 11 Sep 2014 PDT, address_country_code=US, address_zip=95131, tax=2.02, item_name=something, address_name=John Smith, last_name=Smith, [email protected], item_number=AK-1234, verify_sign=AFcWxV21C7fd0v3bYYYRCpSSRl31AMzH.1OGLzhiRtwR90w31D5sjl55, address_country=United States, payment_status=Completed, address_status=confirmed, [email protected], [email protected], notify_version=2.1, txn_type=web_accept, test_ipn=1, payer_status=verified, mc_currency=USD, mc_gross=12.34, address_state=CA, mc_gross1=9.34, payment_type=instant, address_street=123, any street, 
IPN Response from Paypal Server:
 HTTP/1.0 302 Found
Location: https://www.sandbox.paypal.com
Server: BigIP
Connection: close
Content-Length: 0

As per PayPal's documentation I been to https://gist.github.com/xcommerce-gists/3440401/download# this link is mentioned in PayPal's documentation. And tried using the same code and did setup the url in both PayPal IPN Settings and IPN Simulator's Notify URL too. But still not working. Unfortunately, the code in the above link doesn't add any record to the log file.

I also have an another code which makes record in log file but recorded as Fail.

Code:

<?php
ob_start();
if($_SESSION == null) {
  session_start();
}
error_reporting(0);
require_once('paypal.class.php');  // include the class file
$p = new paypal_class;             // initiate an instance of the class
$p->paypal_url = 'https://www.sandbox.paypal.com/cgi-bin/webscr';   // testing paypal url
$this_script = 'http://'.$_SERVER['HTTP_HOST'].$_SERVER['PHP_SELF'];
if (empty($_GET['action'])) $_GET['action'] = 'process';  

switch ($_GET['action']) {

   case 'ipn': 

      if ($p->validate_ipn()) {

     $subject = 'Instant Payment Notification - Recieved Payment';
     $p->send_report ( $subject );
      }
      else {
     $subject = 'Instant Payment Notification - Payment Fail';
     $p->send_report ( $subject );
      }
      break;
 }     
?>

Solution

You forgat to add a validator this is how mine looks:

Sorry for the code :p

// CONFIG: Enable debug mode. This means we'll log requests into 'ipn.log' in the same directory.
// Especially useful if you encounter network errors or other intermittent problems with IPN (validation).
// Set this to 0 once you go live or don't require logging.
define("DEBUG", 1);

// Set to 0 once you're ready to go live
define("USE_SANDBOX", 1);


define("LOG_FILE", "ipn.log");


// Read POST data
// reading posted data directly from $_POST causes serialization
// issues with array data in POST. Reading raw POST data from input stream instead.
$raw_post_data = file_get_contents('php://input');
$raw_post_array = explode('&', $raw_post_data);
$myPost = array();
foreach ($raw_post_array as $keyval) {
    $keyval = explode ('=', $keyval);
    if (count($keyval) == 2)
        $myPost[$keyval[0]] = urldecode($keyval[1]);
}
// read the post from PayPal system and add 'cmd'
$req = 'cmd=_notify-validate';
if(function_exists('get_magic_quotes_gpc')) {
    $get_magic_quotes_exists = true;
}
foreach ($myPost as $key => $value) {
    if($get_magic_quotes_exists == true && get_magic_quotes_gpc() == 1) {
        $value = urlencode(stripslashes($value));
    } else {
        $value = urlencode($value);
    }
    $req .= "&$key=$value";
}

// Post IPN data back to PayPal to validate the IPN data is genuine
// Without this step anyone can fake IPN data
if(USE_SANDBOX == true) {
    $paypal_url = "https://www.sandbox.paypal.com/cgi-bin/webscr";
} else {
    $paypal_url = "https://www.paypal.com/cgi-bin/webscr";
}

$ch = curl_init($paypal_url);
if ($ch == FALSE) {
    return FALSE;
}

curl_setopt($ch, CURLOPT_HTTP_VERSION, CURL_HTTP_VERSION_1_1);
curl_setopt($ch, CURLOPT_POST, 1);
curl_setopt($ch, CURLOPT_RETURNTRANSFER,1);
curl_setopt($ch, CURLOPT_POSTFIELDS, $req);
curl_setopt($ch, CURLOPT_SSL_VERIFYPEER, 1);
curl_setopt($ch, CURLOPT_SSL_VERIFYHOST, 2);
curl_setopt($ch, CURLOPT_FORBID_REUSE, 1);

if(DEBUG == true) {
    curl_setopt($ch, CURLOPT_HEADER, 1);
    curl_setopt($ch, CURLINFO_HEADER_OUT, 1);
}

// CONFIG: Optional proxy configuration
//curl_setopt($ch, CURLOPT_PROXY, $proxy);
//curl_setopt($ch, CURLOPT_HTTPPROXYTUNNEL, 1);

// Set TCP timeout to 30 seconds
curl_setopt($ch, CURLOPT_CONNECTTIMEOUT, 30);
curl_setopt($ch, CURLOPT_HTTPHEADER, array('Connection: Close'));

// CONFIG: Please download 'cacert.pem' from "http://curl.haxx.se/docs/caextract.html" and set the directory path
// of the certificate as shown below. Ensure the file is readable by the webserver.
// This is mandatory for some environments.

//$cert = __DIR__ . "./cacert.pem";
//curl_setopt($ch, CURLOPT_CAINFO, $cert);

$res = curl_exec($ch);
if (curl_errno($ch) != 0) // cURL error
    {
    if(DEBUG == true) { 
        error_log(date('[Y-m-d H:i e] '). "Can't connect to PayPal to validate IPN message: " . curl_error($ch) . PHP_EOL, 3, LOG_FILE);
    }
    curl_close($ch);
    exit;

} else {
        // Log the entire HTTP response if debug is switched on.
        if(DEBUG == true) {
            error_log(date('[Y-m-d H:i e] '). "HTTP request of validation request:". curl_getinfo($ch, CURLINFO_HEADER_OUT) ." for IPN payload: $req" . PHP_EOL, 3, LOG_FILE);
            error_log(date('[Y-m-d H:i e] '). "HTTP response of validation request: $res" . PHP_EOL, 3, LOG_FILE);

            // Split response headers and payload
            list($headers, $res) = explode("\r\n\r\n", $res, 2);
        }
        curl_close($ch);
}

// Inspect IPN validation result and act accordingly

if (strcmp ($res, "VERIFIED") == 0) {
    //Your code here
    // check whether the payment_status is Completed
    // check that txn_id has not been previously processed
    // check that receiver_email is your PayPal email
    // check that payment_amount/payment_currency are correct
    // process payment and mark item as paid.

    // assign posted variables to local variables
    if(DEBUG == true) {
        error_log(date('[Y-m-d H:i e] '). "Verified IPN: $req ". PHP_EOL, 3, LOG_FILE);
    }
} else if (strcmp ($res, "INVALID") == 0) {
    // log for manual investigation
    // Add business logic here which deals with invalid IPN messages
    if(DEBUG == true) {
        error_log(date('[Y-m-d H:i e] '). "Invalid IPN: $req" . PHP_EOL, 3, LOG_FILE);
    }
}