The New Zealand Defence Force (NZDF) has rejected the claims, saying nine insurgents were killed in the operation.
The inquiry heads, former prime minister Sir Geoffrey Palmer and former Supreme Court judge Sir Terence Arnold, have promised to get to the truth.
Motley said the annotated satellite images in the book at pages 64-67 were wrong.
Last month, Hager asked the inquiry to disregard them but Motley noted they the images still appeared on the Hit & Run website.
"Based on the data that NZDF has reviewed, it is impossible that events were as Mr Hager and Mr Stephenson alleged on pages 64-67 in their book," Motley told the inquiry.
Stephenson, who was at today's hearing in Wellington, watched the presentation from Motley closely, at times speaking to his lawyer Sam Humphrey.
Hager was not at the hearing today.
Earlier today Wayne Mapp, who was the defence minister at the time, told the hearing he was briefed on Operation Burnham before it was carried out because, coincidentally, he and then Defence Force Chief Lieutenant General Jerry Mateparae were in Afghanistan at the time.
"I have always believed that once the allegations about possible civilian casualties in Afghanistan had been made, those allegations should be investigated," Mapp said.
Mapp said the SAS were under the day-to-day operational command of the ISAF (International Security Assistance Force) Special Forces Command but New Zealand retained full command of all of its personnel.
"I did not approve or select missions for the SAS," Mapp said.
"As a result of being in Afghanistan, I was briefed on the operation prior to it being undertaken," he said.
The former Labour government had deployed the SAS twice before to Afghanistan and Mapp said the decision to send them back in 2009 was made after careful thought and deliberation.
Mapp said it was appropriate for New Zealand to contribute to ensuring a secure environment in Afghanistan that would allow it to rebuild.
Mapp's evidence did not go into events around the SAS raid in August 2010.
Australia's former Defence Force chief Air Chief Marshal Sir Angus Houston was invited to speak to the inquiry about his experiences of the conflict and give an overview of the military decision-making process.
"By far and away it is the innocent civilian population that has suffered the most in Afghanistan. For every new well put in, new school opened or road paved, the death of a civilian put the cause back," he said.
Houston said that despite precautions and training, civilian casualties did occur and they did affect the personnel involved.
"As a commander this was also on my mind, as I know they did not go to Afghanistan to causes the deaths of innocent people. And I know we now have some soldiers still bearing those scars," Houston said.
The Government announced in April last year that an inquiry into Operation Burnham and related matters would be held.
The inquiry aims to establish the facts in connection with the allegations, examine the treatment by the NZDF of the reports of civilian casualties and look at the conduct of NZDF personnel forces.
Human rights lawyer Deborah Manning, who represents Afghan villagers in the inquiry, has launched legal action seeking a judicial review of the investigation which she says should be more open. That matter will be heard later this month.
In his opening remarks this morning, Arnold said much of the information relevant to the inquiry was likely to remain classified and not able to be disclosed.
A small but peaceful protest was held outside the hearing this morning. Placards and chalk-drawn messages on the pavement claimed civilian deaths in the SAS operation. As the hearing got underway, a handful of people in the audience held up small signs before leaving.
