Is it correct to say "It was not happened"? I have heard people saying "It was not happening" or "It didn't happen" but "It was not happened" is new to me.
The past progressive tense uses the past of to be with the present participle: "It was not happening". This tense is to say that something was - or in this case was not - happening continually over a period in the past.
The simple past is most often formed from the preterite form of the verb ("It happened"), but sometimes for emphasis, inversion of - as in this case - negation, it is formed with forms of do: "It didn't happen".
The form "It was not happened" doesn't match any construction for any tense, and is incorrect.
It is incorrect to say "It was not happened", because it is against the rules of tense - past tense, in this case.
It could be "It did not happen", in which case it will be simple past.
"It was not happening" is past continuous and differs in meaning from "It did not happen".
Hope the links will be of help to you.
The verb “happen” can not take a direct object, and it therefore has no passive form, so there is no “is/was/be happened” tense. There are a number of English verbs like this: occur, arise, and exist are some others. Here’s a link with a short discussion.