Deleted pages should return 410 ... check with DEV for why that is not happening!

Frankly I don’t trust your dev folks. Are they returning a 404 and serving the new 404 page at the originally requested URL ... or have they replaced the former redirect to / with a new redirect to /404.html ?

Depending on your site, it may or may not be acceptable to use the same (physical) page for both 404 and 410.

Use a header status code checker to check header response. Your error page(s) should not be returning a "200 OK" header status response.

Error pages should be returning response codes appropriate to the situation... a "404" response indicates "not found". A "410 Gone" indicates that the url is likely to be unavailable permanently.

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You posted....

Now GSC URL inspection tool says user declared canonical for these new 404 pages is the homepage

See Google's "Search Console Help"...

URL Inspection Tool
[support.google.com...]
From the help page...

Important notes:
- This is not a live test. This tool describes the most recently indexed version of a page, not the live version on the web....

Also, on the help page...

URL is not on Google...
- What it means: This URL won't appear in Google Search results, but we think that was your intention. Most common reasons include a password-protected page, a noindex directive, or that this is an alternate version of a canonical page (alternate version pages are not indexed)....

- A few possible reasons: If the "User-declared canonical" and "Google-selected canonical" values are different, this means that this URL is one of a set of similar pages, and Google has chosen to index another version of the same page...

Read further details as directed on that help page....