Issue with Host-Based Relay on Sophos XGS 3300 is not working

Host Based Relay means, this IP can send whatever it wants (Regardless of FROM and TO).

Upstream Host means, every host there can do any FROM but only TO your Domain, you configured under Policies. 

in over scenario. I just use host-based relay allowed few hosts to send email. But other Host also send email successfully.

Do you have ANY in Upstream Host? This is the reason. 

no Upstream Host are allowed as shown in pic

additionally its is observed that email is sent successfully with in the domain email addresses but whenever email is send to outside the domain then it show access is denied.

additionally its is observed that email is sent successfully with in the domain email addresses but whenever email is send to outside the domain then it show access is denied.