Thanks Xulfiqar for the info.
Today I got the shock absorber removed by mechanic and took it to machinist, who after physical inspection told me that the fitting and mounting is ok, but there is a problem with shock, the rod, comes up way too quickly and hits the top. I myself examined it thoroughly but couldnt believe what he was claiming as in my opinion, it was reciprocating well. He reassembled it again and I again installed that. Now the sound is totally gone, and on the jumps and rough roads, its working perfectly fine. Don't know what actually went wrong ...:S