Hello Nitin,
Thanks for the clarification.
It means sender channel is containing flat XML file format.
Just to ask you, what is the sender CC which you are using? Asked this because depending upon the source file format, target should be created, i.e., since the error is on the receiver side, so obviously it is due to source (more precisely, message type structure, as it is the mapping which links the source to target.....also the error log does not talk about any kind of integration error between design and configuration).
Kind Regards,
Souvik