All the address and state and other details i send to the test.authorize.net is going successfull.
Response Code i recieve through AIM is
 => (TESTMODE) This transaction has been approved.  => 000000  => P or Y (based on if i turn on the test mode or not)
Not even for a single wrong address has it shown AVS error ( except when i decline the the Y state from the test site )
Please advice and help
AVS is triggered only when a transaction really goes through and the merchant system verifies the billing address belonging to the credit card. If you're using a developer account, all you can do is simulate the AVS errors, which Raynor has helpfully posted a link for above. Incidently, setting AVS to decline on certain things will still cause a transaction fee to be generated, so to prevent a bunch of extra fees, you should either either code something to track the number of times people submit orders in close succession, and limit them to around 3, and/or let them through on most things and only test zip code. Assuming, of course, that you sell cheaper items and not items that cost hundreds of dollars, in which case even 20-30 transaction fees aren't necessarily going to mean much.