Want to know is Android provide hardware level access like SMS Inbox handling,Incoming call handling etc.
Considering how short it is, that is a remarkably complicated question.
There are two levels of Android development: firmware development and SDK development.
Firmware development is building the software that makes up the Android OS and is installed on devices. Firmware development is done in a mix of C and Java, and you have complete access to the hardware. However, you can only deploy firmware as firmware -- you cannot, for example, sell firmware via the Android Market.
The Android SDK provides a filtering mechanism for hardware access, in the interests of security, API stability, ease of use, and available engineering time. Applications written to the SDK can be widely deployed on existing Android devices but have limited access to hardware. Generally, these limits are in the form of events (e.g., being informed when a call comes in) and occasionally system services (e.g., telling the camera to take a picture).