I am asking you to think of the mechanism of how depletion region forms it forms when excess electrons in n-region fill the vacant places near the junction in p-region
The depletion region forms when charge carriers diffuse from the p side to the n side and from the n side to the p side. They recombine/annihilate and what is left are fixed charges: the donor and acceptor ions.
as it seems to be depletion region shouldn't exist at all.Electron in depletion region should move to n-region and leave covalent bond and the vacant space left behind by these could be immediately filled by electrons coming from negative terminal of the battery.So where is the catch
A free electron moves from the n region into the depletion region. At the same time a free hole moves from the p region into the depletion region. These recombine/annihilate, leading to the depletion region remaining depleted of free charge carriers.
It sounds like you are using "covalent bond" to refer both to holes (which is very wrong) and to donor/acceptor ions (which is less wrong, but not a good way to describe it). It is important to know that these two things are different. Holes are mobile charge carriers, donor/acceptor ions are fixed charges.
After this diffusion of mobile carriers happens, the remaining donors/acceptors create an electric field in the depletion region. This forces electrons out of the depletion region and into the n region, and forces holes out of the depletion region and into the p region. This is what prevents electrons from your battery/whatever from just pouring in to make up for the missing electrons. This manifests itself as an energy barrier which leads to the diode behavior.
now when we do forward biasing we are trying to pull electrons that are in covalent bond which would require some energy
No we are not. Free electrons and free holes do not require any energy cost to move them around. There might be an energy barrier, and there is such a barrier in a pn junction diode, but that is different than what you are describing.
and we provide so using battery(0.7J/Q in case of silicon or simply 0.7V)
The 0.7 V built in potential in a silicon pn junction diode comes from the energy band barrier you must overcome before you can get a reasonable number of electrons or holes over that barrier. The distribution of electrons (and holes) in the conduction (and valence) bands is the product of the Fermi distribution and a parabolic density of states. The result is a distribution with a long tail trending out from the band gap. When you apply enough forward bias you raise the potential of the p side relative to the n side and lower this energy barrier. Those electrons (and holes) at the end of the tail can then make it over the barrier and they contribute to current.
if holes exist in valance bond and electrons and holes are constantly combining at the jucntion so from where all these holes are coming from?
There are steady state concentrations that exist in doped regions (usually equal to the doping concentration for the majority carrier). Electrons and holes are naturally always thermally generating and recombining on their own. The steady state concentrations are when these rates cancel out. Generation can occur in the depletion region, and then the electric field causes these to drift into the neutral regions. This is actually the source of reverse bias leakage current.
There is insignificant recombination in the depletion region since to recombine an electron and a hole need to find each other. Since the depletion region is depleted of these carriers, there aren't many around so it is very unlikely.
As an aside, please stop trying to understand semiconductors by thinking that holes are just a missing electron. That model starts to fall apart as soon as you try to use it for just about anything and is therefore more trouble than it is worth. It is better to just accept that electrons and holes are each their own (quasi)particle and move on with your life. If you want to talk about the electronic properties of crystal lattices that give rise to these quasiparticles you can ask a question about that (many of the people here might try to send you to physics.se for such a question) but the answers are probably going to be hard to understand if you are just learning about semiconductors for the first time. But if it helps, electrons in semiconductors aren't "real" electrons either. They too are a quasiparticle with properties (mainly mass) that differ from their "real" counterpart.