The root cause for this was the Cloudron server had the hostname as "box.domain.com" (same as the relay). Debian/Ubuntu has a quirk that it will put the hostname in /etc/hosts to resolve as 127.0.1.1. This meant that when we try to set it as relay, it resolves to 127.0.1.1 instead of the actual IP.
To add to the confusion, I suggested using the host command which does not use /etc/hosts (i.e the nsswitch mechanisms) and uses only the DNS. If I had suggested using ping then we would have narrowed down the issue more quickly...
Anyway, the fix is simply to hostnamectl set-hostname somethingelse.domain.com and also edit /etc/hosts (for some reason, hostnamectl doesn't change hosts file even after reboot, 🤷 ).
Now I understand why so much user end by not using KMail (if you are curious look at KDE forum and Reddit for KMail issue)
Basically @girish you were on the right track simply I had to go a little bit deeper
instead of looking under identities (because, of course, my Identity was well configured)
the issue is located under the sending configuration where you have to declare the mail email (not the alias even if my test is not with the alias.)