Shonitapur is a legend, not a documented settlement. The name belongs to Puranic literature, where Shonitapura (Sanskrit shonita, blood, and pura, city) is the fortress capital of the asura king Banasura. Nothing in the Nepali epigraphic record places that city at Thankot, and we know of no published excavation that would. What Thankot has is a tradition, repeated here for generations, that the ridge above the town and the gorge below it are the ground the story describes.
The story is set out in the Bhagavata Purana (canto ten, chapters sixty-one to sixty-three) and elaborated in the Harivamsa and the Shiva Purana. Banasura, son of Bali and great-grandson of Prahlada, is a devotee of Shiva so complete that Shiva grants him a thousand arms and, in the fuller tellings, a promise to guard his city in person. His daughter Usha dreams of a young man she has never met. Her companion Chitralekha, who can draw any face in the world, sketches until Usha recognises him: Aniruddha, the grandson of Krishna. Chitralekha then carries the sleeping prince from Dwarka to Shonitapura by magic.
Banasura finds Aniruddha inside the women's quarters and imprisons him. Krishna, Balarama and Pradyumna march on the city. Because of the promise he made, Shiva fights on the defenders' side, and the episode becomes one of the rare moments in Puranic narrative where two of the great gods stand against each other. Krishna cuts away all but four of Banasura's thousand arms, spares his life at Shiva's request, and Usha and Aniruddha are married. In the telling that names the place, the blood of the fallen soaks the ground, and the city is Shonitapura from then on.
Read it as what it is: a story about desire, a father's pride and the limits of a god's promise. It is a good story. It is not a municipal record.