There are several errors. For example you use variable n before its initialization
matrix=(int**)malloc(n*sizeof(int*));
scanf("%d",&n);
There must be
scanf("%d",&n);
matrix=(int**)malloc(n*sizeof(int*));
You never set variable flag to 1. So it always has value equal to 0 independing of the matrix values.
The break statement in this loop
for(j=0;j<n;j++)
{
if(matrix[i][j]!=1 && matrix[j][i]!=0)
flag=0;
break;
}
have to be inside the compound statement of the if statement. Otherwise it has no sense.
For example the loops can look the following way
flag = 1;
for ( i = 0; flag && i < n; i++ )
{
for ( j = 0; flag && j < n; j++ )
{
if ( matrix[i][j]!=1 && matrix[j][i]!=0 ) flag = 0;
}
}
Take into account that blank lines between C constructions are very important elements of the code. They make the code more clear and readable.
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solved Checking an identity matrix in C