If you ask any man in this world, "Who is it that wakes up? Who is it that dreams? And who is it that sleeps?" He will answer, "It is I that wake up; it is I that dream; it is I that sleep." If you ask him "What is this I?" he will say, "this body is the 'I'." He will tell you that it is the body that sleeps. When the brain is tired or exhausted, it is the body that sleeps; when the brain is disturbed, it is the body that dreams; and when the brain is refreshed, it is the body that wakes up after sound sleep.
A psychologist who has made a special study of the mind will say that the mind, which has its seat in the brain, is the 'I'. He says that the mind is inseparable from the brain and it perishes along with the physical body.
The metaphysicians and the spiritualists hold that the mind continues to exist somewhere after the death of the body. According to psychologists, metaphysicians and spiritualists it is the mind that wakes up, dreams and sleeps and this mind is the 'I'.
A Theologist says that there is a soul which is quite independent of the body and the mind and it is this soul that wakes up, dreams and sleeps and the soul is the 'I'. This soul enters another body in accordance with the law of Karma.
A Vedantin says that neither this body nor the mind nor the soul is the 'I'. There is one pure consciousness or Atman in all beings which is Infinite, Eternal, all-pervading, self-existent, self-luminous and self-contained which is partless, timeless, spaceless, birthless, and deathless. This is the real 'I'. This 'I' never wakes, dreams or sleeps. It is always the seer or the silent witness (Sakshi) of the three states of waking, dreaming and sleeping. It is the Turiya or the fourth state. It is the state that transcends the three states.
It is the false or relative 'I' called Ahamkara or ego or that Jiva that wakes up, dreams and sleeps. The waker, the dreamer and the sleeper are all changing personalities and unreal.
The real self, the real 'I' never wakes up, dreams and sleeps. From the point of the Absolute Truth or Paramartha Satta no one wakes up, dreams and sleeps.
Excerpted from Philosophy of Dreams by Sri Swami Sivananda, A Divine Life Society publication; First Edition: 1958.