Soak the cashews in about 1/2 a cup of water for about half an hour. Drain the water and then grind the cashewnuts to a paste adding a bout a couple of tsps of water, as required. Keep aside.
If your paneer cubes looks wet, pat them dry. Then sprinkle all purpose flour over the paneer and toss so the paneer cubes are well coated. If you fry paneer as it is, it sometimes tends to get mushy and sticks to the pan. Coating it with flour ensures that paneer doesn't stick and get mushy when fried/ sautxe9ed.
Heat the oil in a pan, and add the paneer cubes ensuring that each cube touches the oil in the bottom of the pan. Brown them to a deep golden colour, over medium heat. Toss frequently so the paneer browns uniformly with a somewhat crisp crust. When they're done, remove from the pan and put into the warm milk. Keep aside.
To the remaining oil in the pan, add the ginger and garlic pastes and sautxe9 for a minute. Now add the purxe9ed/ grated onion and sautxe9 till the raw smell of the onions disappear. If the mixture appears to be drying out, add a tbsp of water whenever required.
Now add the purxe9ed tomato and cook for a few minutes till it looks done. Add the turmeric and coriander powders and sautxe9 for a couple of minutes. Then add the garam masala, sautxe9 for another minute and add the paneer along with the milk in which it was soaked.
Mix well, gently, and add the salt. Also add the kasuri methi and 1/4 cup of water. Stir gently and bring to a boil. Turn down the heat and simmer for about 5 minutes.
Now add the cashew paste and mix well, till no white streaks are visible. Your paneer masala should now have a rather thick sauce-like gravy.
Add the yogurt-cornstarch mixture and mix well, taking care to see that the paneer doesn't get broken. Cook for a minute. At this point, if you feel the gravy is too thick, add a couple of tbsps of water to adjust to required consistency. Paneer butter masala should have a reasonably thick gravy which doesn't really flow.
Transfer to a serving dish and garnish with chopped coriander. Serve warm with chappathis, naan or kulchas.
Important: Make sure you add only 1/4 tsp cornstarch to the yogurt. The cornstarch is not to thicken the gravy but to ensure that the yogurt does not split/ curdle when added to the paneer masala.