Android Studio – Dialog.dismiss is not working inside in adapter class

What @Dev4life said is right you have to call after create the dialog, and you should use AlertDialog instead of Dialog because of security reasons i believe. There is a brief statement in the Documentation about:
Dialogs

The Dialog class is the base class for dialogs, but you should avoid
instantiating Dialog directly. Instead, use one of the following
subclasses:

AlertDialog A dialog that can show a title, up to three buttons, a
list of selectable items, or a custom layout. DatePickerDialog or
TimePickerDialog A dialog with a pre-defined UI that allows the user
to select a date or time.

Here is my code dunno, but should work:

public class Adapter extends RecyclerView.Adapter<Adapter.ViewHolder> {
    
    private final Context mContext;
    private final ArrayList<String> mData;
    AdapterCallback callback;
    
    AlertDialog dialog;
    Button btnClose;
    AlertDialog.Builder builder;

    public Adapter(Context mContext, ArrayList<String> mData, AdapterCallback callback) {
        this.mContext = mContext;
        this.mData = mData;
        this.callback = callback;
    }

    public class ViewHolder extends RecyclerView.ViewHolder {
        
        TextView tv_bank_name;

        public ViewHolder(@NonNull View itemView) {
            super(itemView);
            tv_bank_name = itemView.findViewById(R.id.tv_bank_name);
        }
    }

    @NonNull
    @Override
    public ViewHolder onCreateViewHolder(@NonNull ViewGroup parent, int viewType) {
        return new ViewHolder(LayoutInflater.from(mContext).inflate(R.layout.item, parent, false));
    }

    @Override
    public void onBindViewHolder(@NonNull ViewHolder holder, int position) {

        if (Helper.readSharedPref(mContext, Constants.PREF_KEY_Sub).equalsIgnoreCase("notactive")) {
            if (!mData.get(position).equalsIgnoreCase("pending")) {
           alertSuccessShowDialog(position);
            }
        }
    }

    @Override
    public int getItemCount() {
        return mData != null ? mData.size() : 0;
    }

    @Override
    public int getItemViewType(int position) {
        return position;
    }

    public interface AdapterCallback {
        void onItemClicked(int position);
    }

    private void alertSuccessShowDialog(int position) {
        View view = LayoutInflater.from(mContext).inflate(R.layout.enquiry_popup, null, false);
        btnClose = view.findViewById(R.id.iv_close_btn);

        builder = new AlertDialog.Builder(mContext);
        builder.setView(view);
        
        dialog = builder.create();
        dialog.getWindow().setBackgroundDrawableResource(android.R.color.transparent);
        btnClose.setOnClickListener(new View.OnClickListener() {
            @Override
            public void onClick(View v) {
                callback.onItemClicked(position);
                dialog.dismiss();
            }
        });
        dialog.show();
    }
}

This is my last bet, dunno know how to fix.
Create a class for your dialog and if needed pass the Context in the Constructor.

Dialog Class:

public class DialogEnquiry extends DialogFragment {
        
        private AdapterCallback callback;
        private int position;

        public DialogEnquiry(AdapterCallback callback,int position){
            this.callback = callback;
            this.position = position;
        }

        @NonNull
        @Override
        public Dialog onCreateDialog(@Nullable Bundle savedInstanceState) {
            
            View view = LayoutInflater.from(requireContext()).inflate(R.layout.enquiry_popup, null);
            btnClose = view.findViewById(R.id.iv_close_btn);
            btnClose.setOnClickListener(new View.OnClickListener() {
                @Override
                public void onClick(View v) {
                    callback.onItemClicked(position);
                    dismiss();
                }
            });

            return new AlertDialog.Builder(requireContext())
            .setView(view)
            .create();
        }

        @Override
        public void onStart() {
        super.onStart();
        getDialog().getWindow().setBackgroundDrawable(new ColorDrawable(Color.TRANSPARENT));
        }
    }

And inside of your Adapter, maybe you will need to pass the fragment manager in the adapter, but i dunno if this is right, i’m new in android:

new DialogEnquiry(callback, position).show(fragmentManager, "dialog");

This is my last attempt, i hope this can give you some insight.
Good Lucky!