I replied to notify of this issue on https://help.zoho.com/portal/en/community/topic/issue-in-incoming-mail but thought I would submit a new post for it.  

We are getting some incoming mail being bounced back to senders with the following: 

Action: failed

Status: 5.2.3

Diagnostic-Code: smtp;554 5.2.3 MailPolicy violation Error delivering to mailboxes

Our MX records appear to be fine, and the problem seems to occur only from some emails such as @hotmail.com.

Please help.

Thanks, Kat