Praise be to Allah and may peace and blessings of Allah are sent upon his Prophet Muhammad ﷺ (peace be upon him) and his family, companions, and those who follow them in righteousness until the day we meet Him. It was never mentioned in Hadith that Prophet Muhammad ﷺ celebrated or signified the middle night of Sha’ban with any act of worship. Therefore, the occasion has no base. All Hadiths in this regard are unauthentic.
Allah Subhanaho wa Ta'ala says in the Quran:
In Hadith (Sayings confirmed to be said by Prophet Muhammad ﷺ), it was confirmed that the Prophet ﷺ said:
Celebrating this night or signifying it with any extra acts of worship - knowing it is a religious invention - is exactly as claiming that the Prophet Muhammad ﷺ didn’t convey his message in full. This is due to the fact that if it is for the benefit of this Ummah, our Messenger Muhammad ﷺ would have celebrated it or signified it with further attention, let alone that he would have taught his companions accordingly.
Having that said, Allah Subhanaho wa Ta'ala, told us in the Quran:
This Ayah (verse) clearly states that Prophet Muhammad ﷺ has fully and perfectly conveyed the message from Allah. Therefore, performing an act of worship that was not mentioned in the Quran or the Hadith, even if the act of worship itself is legitimate but the context is not, is considered Bidaah (a religious invention) in Islam.
May Allah Subhanaho wa Ta'ala make us from those who precisely follow the Sunnah of Muhammad ﷺ.