In a deep pan, heat the butter and add onions, tomatoes, and cashews and cook them till the smell and moisture of the tomatoes fade away. Add turmeric and red chilly powder and stir for 2 mins on low flame.
Now, add 100 ml water to the pan and give it a boil. Cover the lid of the pan and soak the onions and tomatoes on medium flame till they get mushy.
Set the onion tomato masala aside for 10 mins for it to cool down. Then transfer the masala to the grinding jar and make a paste out of it and strain it into a bowl to have a smooth gravy.
Heat the oil and butter in the skillet, and mix red chilli powder, turmeric powder, and coriander powder well. Make sure not to burn them.
Now add the gravy to the spices and give it a stir.
Add sugar, fenugreek leaves, and garam masala to the gravy and stir for 2 mins.
Add some milk for consistency in the gravy and add paneer and give it a nice stir.
Your shahi paneer is ready to serve