During a touch-and-go exercise on a training flight, the pilot instructor cut off power to simulate a right-hand engine failure. Observing aircraft speed falling below the bug speed, the pilot instructor cautioned the trainee pilot. The trainee pilot eased the control column forward and reduced the pitch to arrest further fall in aircraft speed. However, on observing further reduction in speed of the aircraft, the instructor pilot pushed forward the power levers, but before the engines could spool up, the aircraft mushed into the ground and sustained substantial damage. The probable cause of the accident has been attributed to failure on the part of the flight crew to ensure that both engines were developing take-off EPR before the right-hand engine thrust lever was pulled back. This resulted from disregard and lack of adherence to the prescribed procedures of giving standard callouts and monitoring of thrust lever(s) position and engine instruments, etc.