Hi Sreekanth -
In order for Tableau to connect to a "live" Excel workbook as a data source, the file must be stored in a location that the Windows Account Tableau Server runs under has access to.
For example, Tableau Server runs under the Windows Account "MyDomain\Tableau", then the folder in which you store the Excel workbook must be accessible to the MyDomain\Tableau user.
This folder might exist on your local machine if you keep it running 24 x 7, but it would probably be more appropriate to host it on a "real" file server.
Also, you'd want to be sure that when you build the report you do so using the copy of the Excel workbook which has already been dropped IN that special location - don't point at the one on your desktop.
Does this make sense?