It's quite a generic error, but the best way to diagnose it would be to use EPiServer's built-in support for log4net.

Have a quick read through this:

http://world.episerver.com/FAQ/Items/How-do-I-create-a-log-in-EPiServer/

I tried implementing it, and log does not give me any error on that.

Please can some one response, it is not happening in staging or local server. Waiting for your responses.

Any error 500 that's captured using an update panel should be visible within log4net's log file. Let me check you're implementing it correctly.

You've got an errorLog.Config file that's in the root of your site, and the configuration for it should look something like this:

<?xml version="1.0" encoding="utf-8" ?>
<log4net>
      <!--<appender name="FileAppender" type="log4net.Appender.RollingFileAppender">
        <file value="C:\\Inetpub\\wwwroot\\YourSiteName\\Error-log.txt" />
        <appendToFile value="true" />
        <rollingStyle value="Date" />
        <layout type="log4net.Layout.PatternLayout">
           <param name="ConversionPattern" value="%d\t%X{siteid}\t%m%n" />
        </layout>
      </appender>-->
      <root>
            <level value="ALL" />
            <appender-ref ref="FileAppender" />
      </root>
</log4net>

Remember, this config file is the config file in the root of the website you're experiencing the error in.

Uncomment the commented section to capture all the exceptions. Then cause the error again by refreshing the page. There'll be a text file called error-log.txt that'll fill up with a lot of information. Doing a text-find for the word "exception" should show up your error. I've had 500 errors with update panels in the past (quite a few times!) and I've never had any problems capturing them using this method.

Have a go with that, and let us know how you get on. :-)