upgrade to Big Sur

If going the Erase and Install - follow the advise from previous posting and have a very recent TM Backups

Below will Wipe the Entire Drive and ALL Data - there is no recovery - period.

To perform this action will require booting from a Bootable Installer. 

This will have to be performed from a Qualifying Computer to run the version of macOS to be made on the Bootable Installer. Example : Bootable Installer of Big Sur would have to be done on a computer that Qualifies to run Big Sur.

Once that is done read on for preparing the Destination computer  >>

Only works on Intel Based Apple Computers.

Extra Special Notation regarding the Touch ID equipped Apple Computer. About Startup Security Utility and Must Enable from Recovery Mode the ability to boot from External Drive Before Attempting 

1 - Shutdown computer and disconnect all external drive Except the newly created Bootable Installer.

2- Restart and immediately hold the OPTION key until the Startup Manager appears and choose the USB Drive. 

3 - It will present options >> Disk Utilities >> View >> View ALL attached Drives. 

4 - Choose the Upper Most Drive ( not the volumes indented and list below ).

5 - The drive normally is called Apple Media or Apple SSD - that is the drive to Erase and format as APFS with the GUID Partition Map.

6 - Once that is done >> backup out of Disk Utilities and choose install macOS. 

7 - Follow the prompts and it may automatically reboot several time. 

8 - Upon a final reboot - Setup Assist will present with the newer version of macOS.

I followed all the steps for upgrading

Which steps? You don't appear to be running the installer from your Applications folder. It looks like you created a bootable installer and are running it from that drive--not sure why that won't work, but that is not in any instructions I know about.

Have seen below affecting only Monterey. Have not seen this same appearing for Big Sur.

There are reports appearing on the ASC Forums regarding failed installation of Monterey on older Qualifying Apple Computers. In most cases this is related to having a NON Apple Original internal drive ?  

The EFI Boot ROM included in Monterey is verifying for Original Apple Drive and if not found , may Balk or fail to upgrade to Monterey. 

Reports indicate the EFI BOOT ROM is Required to Flash the Computer and is a  requirement for a Successful Monterey Installation.

From above picture it look Original Apple.

After additional pondering and searching the ASC Forums - have found the rare instance where moving from Catalina directly to Monterey fails.

In those instances - the user first upgraded to Big Sur macOS 11 and eventually was able to upGrade to Monterey macOS 12.

It was never disclosed why only that is worked - for them.

you should have a bootable Big Sur to upgrade Catalina then it will work. Hopefully you are not just launching Big Sur while Catalina is booted.

Hopefully you are not just launching Big Sur while Catalina is booted.

Why not? That's how it is supposed to work.

Interesting but must ask again - it this the Original Apple Internal Drive or an After Market Drive.

Must admit - somewhat at a loss to understand where the issue is.

If you don’t mind erasing, go ahead. Since you have a bootable USB, use that to erase and install.

Make sure you have a complete backup (or two, just to be safe) before erasing your hard drive.