Gathering to Recite the Qur’an on Behalf of the Dead

Sheikh Ahmad Kutty, a senior lecturer and Islamic scholar at the Islamic Institute of Toronto, Ontario, Canada, states: Islamic funeral rites are extremely simple and well established. We must stick to them as best as possible. If we are eager to benefit the souls of the deceased, the proper way to go about it is not by improvising new ways, but by doing precisely those things that have been prescribed by Allah and His Messenger. Here is a list of things that have been considered as either prescribed or permissible:

1. Remembering them in our prayers. We read in the Qur’an, (…those who pray, Our Lord, forgive us and those who have gone before us in faith and do not leave in our hearts any ill-feeling or malice towards those who cherish faith.) (Al-Hashr 59: 10) One of the Companions asked the Prophet (peace and blessings be upon him), “Do I owe anything towards my parents after their death?” He replied, “Yes, you owe it to them to constantly pray for them and ask forgiveness of Allah on their behalf, to fulfill their promises and covenants, and offer charity on their behalf and to foster their ties of kinship and honor their friends.”
2. We also read in the traditions that one may perform Hajj or `Umrah on their behalf, after one has done so for himself.
3. Many scholars also consider it permissible for the children and relatives to read the Qur’an and offer supplications on their behalf. But it must be remembered, all scholars agree that to celebrate such readings on fixed days such as seventh, fortieth, or death anniversaries, is considered a clear innovation (bid`ah that must be shunned. So, the proper way is for individuals to recite the Qur’an on their own, if they so wish, and pray to Allah to give the rewards to the deceased.
What we have stated above are the practices recommended or permitted in Islam. We have sufficiency in them, so we do not need to resort to questionable practices such as the one you have mentioned.
The Prophet (peace and blessings be upon him) clearly warned us against all sorts of innovations in worship when he said, “Leave it as I have left it. Remember the nations before you perished because of their excessive questioning and their departure from the ways of their prophets.”