loopback sqlplus

I think you misread something.

you can create loopback ip addresses,  you can have a loopback adapter for dhcp in windows,  you can create a loop back db link.   but there is no "loopback sqlplus"

Just to add to what sdstuber said: The loopback ip address is 127.0.0.1.  You can configure your tnsnames.ora file to use this.

http://en.wikipedia.org/wiki/Loopback

This is exactly what is told by my team lead " I tried a loopback sqlplus and that worked. "  so now I would like to know what does this mean

Are you possibly referring to flashback?

They probably meant they connected through sql*plus using the 127.0.0.1 ip address and it worked.

You will need to ask them what they meant.  We weren't there for the conversation or the context of the conversation.

Since your team lead used the phrase, I suggest you ask him/her.

So how do we connect sqlplus using 127.0.0.1 and lastly how can we configure tnsnames file to use loop back adapter

are you speaking about loopback db link? If so loopback -A dblink that connects back to the SAME database.
It is useful for testing
It is useful for connecting as another user in your current session (eg: the loopback link can
connect as scott/tiger while you are logged in as hussain...

hussainkhan22 - a little followup.  

You ask a lot of questions based on not understanding what your team lead has said or not knowing how to do the tasks.  You really should discuss this with your lead.

If it turns out you're not qualified for your current position, that's fine.  Move to something else that's better suited but it's a disservice to your employer (and likely to get your position terminated) if you're hiding the fact.