Exchange 2003 SBS – Rejected Mail

Incoming mail from an externally hosted application is addressed to & is from the same e-mail address (sender is user@domain.com & recipient is the same address) The mail is being rejected by Exchange 2003 SBS. The sending application logs show-

Failure Reason: Error transferring to mail.domian.com; SMTP Protocol
Returned a Permanent Error 554 5.1.0 Sender Denied

If the message is sento to another internal address as well, rejection message refers to 250 2.1.5

Does anyone have an idea as to what settings will cause this problem of rejecting mail sent from an external source from a valid internal e-mail address to a valid internal e-mail address