Connection reset simply means that a TCP RST was received. This happens when your peer receives data that it can't process, and there can be various reasons for that.
The simplest is when you close the socket, and then write more data on the output stream. By closing the socket, you told your peer that you are done talking, and it can forget about your connection. When you send more data on that stream anyway, the peer rejects it with an RST to let you know it isn't listening.
In other cases, an intervening firewall or even the remote host itself might "forget" about your TCP connection. This could happen if you don't send any data for a long time (2 hours is a common time-out), or because the peer was rebooted and lost its information about active connections. Sending data on one of these defunct connections will cause a RST too.
Update in response to additional information:
Take a close look at your handling of the SocketTimeoutException. This exception is raised if the configured timeout is exceeded while blocked on a socket operation. The state of the socket itself is not changed when this exception is thrown, but if your exception handler closes the socket, and then tries to write to it, you'll be in a connection reset condition. setSoTimeout() is meant to give you a clean way to break out of a read() operation that might otherwise block forever, without doing dirty things like closing the socket from another thread.