Combine milk and bread crumbs in a small bowl and set aside.
Install stacked blade in the 2.1 L Pitcher. Place onion, garlic, and parsley in pitcher, then install the flat lid. Select CHOP and press START/STOP. Once processing is complete run CHOP program again.
Remove stacked blade. Install dough blade.
Place beef, bread crumb mixture, Parmesan, chili flakes, egg, salt, and capsicum in pitcher.
Select speed 1 and run until desired consistency is reached. Remove lid and dough blade.
Using your hands or a 2.5 cm scoop, form meat mixture into 12 meatballs. Coat in flour.
Heat a large sauté pan over medium high heat. Add oil, and cook meatballs until golden brown, turning frequently.
Pour pasta sauce into a 20 cm x 20 cm baking dish. Place meatballs into dish and place casserole dish in oven. Cook meatballs for 40 minutes or until the internal temperature reaches 74°C.