Heat a pan with oil, fry onions until they turn transparent.
Fry tomatoes with salt for 3 minutes. Cook covered till the mixture turns soft and mushy.
Add garam masala, coriander powder, cashews, red chili powder and sugar if using. Fry until the mix gets roasted well and it should begin to leave the sides of the pan. Switch off the heat
When the mixture cools, blend it with 1 cup water in a blender to very smooth.
Add butter to the same pan, add dry spices and fry for one to 2 minutes. Add ginger garlic paste and saute well until the raw smell disappears
Pour the blended puree, add red chili powder, if desired 1/2 cup of water. Cook for 4 minutes or until the gravy thickens. Let the gravy reach the desired consistency before you add paneer.
Pour the blended puree, add red chili powder, if desired ¼ to ½ cup of water. Cook for 4 minutes or until the gravy thickens. Let the gravy reach the desired consistency before you add paneer.
Add paneer kasuri methi . Stir well and cook for 3 minutes.
Transfer paneer butter masala to a serving bowl
Notes
you can skip using garlic and onion and make a no onion no garlic paneer butter masala recipe