I am creating an SMS Application to send and receive SMS.
I am able to send SMS using the following code:
SmsManager sms = SmsManager.getDefault();
What you need to do is register a BroadcastReceiver object. Check out this article for more information.
If you want to hide SMS messages from the primary inbox, you'll need to delete them from the SMS ContentProvider and use your own SQLite database to store them. Also be sure to mark them as read in the content provider to remove the notification from the tray.