Socket closed , error comes when the communication between your Agent and the SQL server is blocked over the network.
Try to do a telnet from agent machine to MSsql server host and port see if you are able to reach it.
If telnet is failing then work with your network admins to fix this communication issue.
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If you encountering this error when you try to fetch data of large volume but not for fewer records then increasing the timeout will help. If the same connection works as Target then the above theory still holds good.
Thanks to you all for your suggestions