Praise be to Allah.
We have to make a distinction here between the two issues: reading Yaa-Seen for one who is dying, and reading it for one who has died. With regard to reading Yaa-Seen for one who is dying, this practice has been reported from some of the Sahaabah. Imaam Ahmad reported in his Musnad from Safwaan: “My shaykhs told me that they were with Ghudayf ibn al-Haarith al-Thumaani when he was dying. He said: ‘Can any of you read Yaa-Seen?’ So Saalih ibn Shurayh al-Sakooni recited it, and when he reached the fortieth aayah, Ghudayf passed away. My shaykhs used to say that when it is recited in the presence of one who is dying, it eases the pain of death.” That was the opinion of Safwaan. ‘Eesaa ibn al-Mu’tamir read it for Ibn Mab’ad (when the latter was dying).(al-Musnad, 16355)
Al-Albaani said in Irwaa’ al-Ghaleel, 3/152: “This is a saheeh sanad going back to Ghudayf ibn al-Haarith, may Allaah be pleased with him. Its men are thiqaat apart from ‘the shaykhs’ who are not named and are therefore unknown (majhool). But the fact that they are unknown is compensated for by their large number, especially since they are of the generation of the Taabi’een…”
Shaykh Ibn ‘Uthaymeen said in al-Sharh al-Mumti’ fi Ahkaam al-Janaa’iz: “Soorat Yaa-Seen may be recited over him (i.e., the one who is dying) for the one who thinks that the hadeeth is correct.” He explained that this is because this soorah contains good news of Paradise, as in the aayah (interpretation of the meaning): “It was said: ‘Enter Paradise.’…” [Yaa-Seen 36:26], and because it makes the passage of the soul easier, and other reasons.
As regards reading Soorat Yaa-Seen for one who has died, there is no saheeh hadeeth to indicate that this should be done. A hadeeth was narrated by Abu Dawood and others which says “Read Yaa-Seen over your dead”, but this hadeeth is not saheeh because its isnaad contains contradictions and narrators who are unknown (majhool). This was stated by al-‘Allaamah al-Albaani in Irwaa’ al-Ghaleel, hadeeth no. 688. Reading Qur’aan over the dead is considered to be bid’ah (innovation), as he states at the end of his book Ahkaam al-Janaa’iz. Some people think that it should be read forty times over the deceased, and some of them may distribute copies of the Qur’aan among the mourners who gather to offer condolences so that they may read, or organize gatherings in the mosque to read it for the soul of the deceased. All of this has no basis whatsoever (in the sunnah), and these are innovated deeds of bid’ah which we should avoid and warn others against. And Allaah is the Source of strength.