Hi Vishwanath,
I'm sympathetic to your need to dismiss a system alert. I needed to do the same thing.
The inability to do is an Apple limitation, not a KIF limitation. Apple prevents one app from being able to interact with other apps for the sake of security. So a hacker cannot steal your protected data. Since KIF runs as part of your App Under Test process, it has the same permissions as the app itself.
Instead what I did was for the UI automation that I'm doing ON THE DEVICE, I worked with our developers to disable the code that causes any system Alerts to occur, i.e. Push Notifications, etc. You can create a specialized target that uses prepropcessor directives (i.e. UITESTS=1) without affecting the code that ships to customers. Wrap the app code in #ifdef (UITESTS) ...
I won't go into the details here as this isn't the place for that.
For the one-off cases, you can either do them manually, choose to use Apple Instruments (part of Xcode), or run those particular tests using KIF on the simulator.
Despite these limitations, KIF is by far the best UI automation tool out there.
Sorry it's not the answer you want, but hope I helped just the same.