Is the practice of "Niaz"—cooking special food on certain occasions, such as the anniversary of the passing of His Holiness Ali, reciting Surahs from the Quran like Al-Fatiha, Al-Ikhlas, Al-Falaq, and An-Nas, then supplicating with humility for Allah to grant Ali a lofty place in Paradise, and consuming the food with utmost respect—considered a major sin or is it permissible in Islam?

This action is an innovation (bid‘ah) because it is a form of worship for which there is no evidence from the Qur’an or the Sunnah (definition). Innovations are of two types:

The first: an innovation that has no basis in the Sacred Law.

The second: adding new characteristics to an act of worship that does have a basis in the Sacred Law, such as reciting Al-Fatihah with the mentioned characteristic in the question. This is an innovation, and their singling out ‘Ali (may Allah be pleased with him) for this act upon his death indicates extremism, and it may be one of the reprehensible innovations of Shiism.