This excerpt is taken from Sheikh Farooq Rafi Sahib's book Qurbani, Aqiqa, and Ashra Zil-Hijjah.
It is not permissible to offer a regular sacrifice on behalf of the deceased, because the traditions regarding regular sacrifice on behalf of the deceased are weak.
① Ahnash, may Allah have mercy on him, states:
رأيت عليا رضى الله عنه يضحي بكبشين فقلت له: ما هذا؟ فقال: إن رسول الله صلى الله عليه وسلم أوصاني أن أضحي عنه فأنا أضحي عنه.
"I saw Sayyidina Ali, may Allah be pleased with him, slaughtering two rams (one on his own behalf and the other on behalf of the Prophet, peace be upon him). I asked him: 'Why is this?' He replied: 'Indeed, the Messenger of Allah, peace be upon him, advised me to offer a sacrifice on his behalf, so I offer the sacrifice on behalf of him.'"
Reference: Weak: Sunan Abi Dawood, Book of Sacrifices, Chapter on Sacrifice on behalf of the deceased 2790. Jami' at-Tirmidhi, Chapters of Sacrifices, Chapter on what has been narrated about sacrifice on behalf of the deceased 1495. Musnad Ahmad 107/1. Musnad Abi Ya'la 459. Mustadrak Hakim 255/4. Shareek bin Abdullah Qazi is a weak narrator and Abu al-Hasna is an unknown narrator.
② Asim bin Dhamirah, may Allah have mercy on him, states:
أتي على بن أبى طالب رضى الله عنه بكبش فذبحه و قال: بسم الله، اللهم منك و لك و من محمد لك، ثم أمر به فتصدق به، ثم أتي بكبش آخر فذبحه فقال: بسم الله، اللهم منك و لك و من على لك
"A ram was brought to Sayyidina Ali, may Allah be pleased with him, and he slaughtered it (and said these words while slaughtering): In the name of Allah, O Allah! By Your ability and for You and on behalf of Muhammad, peace be upon him, for You. Then he gave the ruling about it and gave it as charity. Afterwards, another ram was brought, and he slaughtered it and said these words: In the name of Allah, by Your ability and for You. This sacrifice is on behalf of Ali, may Allah be pleased with him, for You."
Reference: Weak: Sunan Bayhaqi 287/9, Asim bin Shurayb is an unknown narrator.
Abdur Rahman Mubarakpuri, may Allah have mercy on him, states:
لم أجد فى التضحية عن الميت منفردا حديثا صحيحا، وأما حديث على المذكور فى الباب فضعيف كما عرفت
"I have not found a single authentic hadith regarding offering a separate sacrifice on behalf of the deceased, and the hadith mentioned from Sayyidina Ali, may Allah be pleased with him, on this issue is weak, as you know."
Reference: Tuhfat al-Ahwadhi 60/5.
Therefore, including the deceased in the sacrifice or offering a separate sacrifice on behalf of the deceased is not permissible.