I have tty device in /dev , where I send AT commands. I want to read line by line and stop reading file after timeout.
You can use the program stty to configure the tty device. To see the settings for terminal /dev/ttyS0, try
stty -a -F /dev/ttyS0
The default settings regarding timeout are min = 1; time = 0, which means that the reading program will read until at least one character has been read and there is no timeout. Using e.g.
stty -F /dev/ttyS0 min 0 time 10
the reading program (e.g. cat) will finish reading after one second whether anything has been read or not. The unit for the parameter time is tenths of a second; you can check out man stty for more information.