As per iTunes Connect Developer Guide,
1) App name should be distinct
2) App name should not be substantially similar to an existing app name by adding or removing spaces, exclamation points or other characters.
But, today I found 2 applications having same name - Traffic Master. One can found both this applications in US App Store -
i) http://itunes.apple.com/us/app/traffic-master/id421380183?mt=8
ii) http://itunes.apple.com/us/app/traffic-master/id404505490?mt=8
How is this possible? Is it a bug of Apple or is it something achievable?
I think you've answered your own question. At a guess I would think it is an oversight as it seems possible that due to the relatively close release dates of both of these that they may have accidentally both been accepted.
Maybe Apple will twig this and remove one or request they change their name in the coming weeks. Alternatively, only Apple would be able to explain why they allowed two with the same name - and Apple don't really explain themselves :)
Oh and I did check to see if the developer had maybe formed the company listed for the second one but that doesn't appear to be the case, interestingly the games company hasn't added that game to its list of products yet