Heat 1 tblspn oil in a kadai. Add in cubed paneer cubes and fry till light golden. Remove them and soak them it hot water till use. This way the paneer remains soft.
Heat 1 tblspn of oil and add in the fennel,cinnamon,cumin,coriander and dry red chilli and roast them till everything turns golden. It will take around 5 mins.
Add in coconut and saute them for 3-4 mins.
Now remove them in a blender and make into a fine puree by adding some water. Keep this aside for just a moment.
Heat 1 tblspn oil again and add in onions and saute till they turn golden. Add in tomatoes and mix well. Cook for a couple of minutes.
Now remove them to the same blender where the spice masala is kept. Grind all these together to a smooth paste.
Heat 1 tblspn oil in the same kadai and add the ground masala. Add some water and bring everything to a boil.
Add in salt and sugar to taste. Mix well and simmer this for 15-20 mins till oil separates from this.
Now add in the drained paneer cubes and simmer for 5 more mins.
Switch off the flame and serve with roti or anything.