Hello Everyone!
I want to ask that can we give external high frequency clock (more than 16 MHz) to the timer of the arduino?
Well - ATMEGA328 manual's "clock sources" sections (you can download from www.atmel.com ) indicates the clock frequency can go upto 20Mhz. Beyond this, you get into the "overclocking" zone - where the processor and all it's peripherals will not really be guaranteed to work & the chip's life may reduce.
Note though that Arduino's C++ library may be making some assumptions on clock frequency being as per design specs - things like millis() and micros() and any other functions which depend on an underlying assumption of clock frequency (possibly the SPI library also) may become suspect if you push up to 20Mhz using an external crystal.