"Ijaz: if baud rates were wrong i won't get the command echoed from the modem to the lcd + error message."

It is possible that the clock rate & divisor you're using on your 8052 gives a slightly greater baud rate error than the PC's COM port, and that everything just happens to conspire against you in this particular instance, so that the modem rejects your command.

Maybe your 8052 system puts some noise on the line, or your MAX232 is just slightly out of spec?

As Rob says, can you get any more details from the error message?