Why is sensitive instrument kept inside iron box to protect them from earth's magnet?
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Answer:
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Magnetic fields (forces are caused by magnetic fields) cannot be blocked, no. That is, there is no such thing as a magnetic insulator.
A major reason for this has to do with one of Maxwell's Equations:
del dot B = 0
Which implies that there are no magnetic monopoles. That is, where as you can separate electric monopoles (positive and negative charges) such that an E-field never has to terminate on the opposite charge, you cannot do this with magnetic poles. There do not exist any magnetic monopoles. There is no such thing as "magnetic charge." All magnetic field lines MUST TERMINATE on the opposite pole. Because of this, there is no way to stop them -- nature must find a way to return the magnetic field lines back to an opposite pole.
However, magnetic fields can be re-routed around objects. This is a form of magnetic shielding. By surrounding an object with a material which can "conduct" magnetic flux better than the materials around it, the magnetic field will tend to flow along this material and avoid the objects inside. This allows the field lines to terminate on the opposite poles, but just gives them a different route to follow.