See your button3 need to be placed inside updatepanel1. If you are using for fileupload
<asp:updatepanel id="UpdatePanel1" runat="server" xmlns:asp="#unknown">
<contenttemplate>
<asp:fileupload id="FileUpload1" runat="server" allowmultiple="True" />
<br />
<asp:button id="Button3" runat="server" text="Button" onclick="Button3_Click" style="margin-left: 260px" />
</contenttemplate>
<triggers>
<asp:postbacktrigger controlid="Button3" />
</triggers>
</asp:updatepanel>
Or you can use whole of the page in a single updatepanel
for more information see this article
Using-FileUpload-Control-inside-ASP.Net-AJAX-UpdatePanel-Control.aspx[
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