I found SMS notifications are not supported in iPhone,but I found a video on Pebble Smart watch which sends SMS notification and iMessage notification. Here are the video and the application links.
http://www.iphoneincanada.ca/iphone-news/pebble-watch-now-supports-iphone-sms-and-imessage-video/
https://itunes.apple.com/us/app/pebble-smartwatch/id592012721?mt=8
I also found on the web SMS notifications are supported only in iOS6 but not iOS5
Previous stackoverflow and other links on SMS notifications.
Registering SMS notification on iPhone
How to send email,sms notification from iPhone to Bluetooth LE device?
Receive Notification for SMS using iPhone
http://lists.apple.com/archives/bluetooth-dev/2012/Nov/msg00088.html
What needs to be done to get notified? Implementing MAP Profile on the bluetooth device is suffcient ?
I believe that iOS 6 adds message (SMS and iMessage) notification support in the form of the Bluetooth MAP (Message Access Profile).
So unless your intended usage involves you being connected via Bluetooth then you cannot use this feature of iOS6.
I do not think that it is possible to monitor the reception of incoming message with the Apple’s Official iOS SDK since you would need to utilize a private framework, so you would need to make it a jail-broken app.