Add all the ingredients of the paste into a mixer grinder jar & grind it into a fine paste, make sure you soak the cashews in boiling water for 10-15 minutes before adding it, you can also boil it for 5 minutes.
To sauté the paneer, set a pan over high heat & once it gets hot, add the oil & butter.
Once the oil gets hot, add the cubed paneer, salt & Kashmiri red chilli powder, then toss the paneer over high flame for 1-2 minutes, doing this step will help the paneer to hold its structure in the gravy, once sauteed remove the paneer into a bowl & set it aside until you make the gravy.
To make the gravy, heat a wok or a kadhai then add oil & butter, once the oil gets hot, add all the whole spices along with, garlic & chopped green chilli, stir well & then add the onions & cook over medium-high flame until the onions turn light golden brown.
Once the onions turn light golden brown add turmeric powder & Kashmiri red chilli powder, stir well & then add a splash of hot water, stir well & cook the masala for 2-3 minutes.
Further, add the prepared paste with salt & sugar, stir well & cook over medium-high flame until the oil separates.
Once the oil separates add hot water as required to adjust the gravy then cook for 2-3 minutes, then taste the gravy & adjust the seasoning accordingly.
Further add the paneer, butter & all the remaining ingredients, stir well & cook only for 2-3 minutes & then finally sprinkle some more fresh coriander.
Your paneer butter masala is ready to serve.
Serve hot with Naan, Paratha, Tandoori roti or Rumali roti.