Creating New Epics and Stories

Why are you doing any of this and where is the Product Owner for the team?

Now my question is while creating new epics and stories should I delete the old Epics and User Stories created by previous Scrum Master for Release 2 in order to avoid confusion?

To avoid confusion, find out if the current release meets the Definition of Done and is of immediately usable quality. If it is, put it to use. Then find out who wants it and why, and who is accountable for value. Encourage that Product Owner to craft a new Product Backlog based on the emerging empirical evidence.

Scrum team needs to be involved to take decission. Epics are usually written and maintained by the Product Owner and Stories are created by team members. You must speak to Product Owner and Developers and come up with a plan. 

I respectfully say that you did not have a previous Scrum Master.  Unless that person had a job title of Scrum Master and the job description included all of the work that is listed in the Scrum Guide as a responsibility for the Product Owner. 

If you were actually using the Scrum framework, you would have a Product Backlog that contains all known work that is needed in order to make the product successful and achieve the Product Goal.  You would not be creating User Stories to start a new release.  You would be working on the items that are ranked by the Product Owner to be at the top of the Product Backlog because they best allow the Developers to be working on the right things. Those items would have been refined to a point where they are able to be included and completed during a single Sprint. 

The project has 3 Releases and we are at the end of Release 1. So we are developing new Epics and User Stories for Release 2.

Do you have a Gantt chart that shows how all of the features are being built within in release and how they are dependent on each other?  If you said yes, then once again, you aren't part of a Scrum Team as a Scrum Master. 

Scrum's Product Backlog is constantly evolving based upon the feedback received by stakeholders.  Those stakeholders could be customers, sales agents, customer support, or "that guy on the TV News channel that talks about our industry a lot".  The items in the Product Backlog evolve over time as well as more information is gained.  The items in the Product Backlog are ordered in a way that will ensure the Developers are best using their time to deliver value to the stakeholders and the product. Sprint Backlogs are created by pulling in a body of work that will support the satisfaction of a Sprint Goal and that has been deemed possible to be "done" in a single Sprint timebox.

If you want to be a real Scrum Master, I suggest that you stop worrying about how the previous "scrum master" worked. Start focusing on helping the individuals in your workgroup understand the Scrum framework and help them self-organize into a group that is able to deliver usable increments of value each Sprint in order to gain stakeholder feedback that will be used for adjusting the future direction.