Start by deseeding your whole Kashmiri red chilies. Break the chilles and shake them over a plate to take out all the seeds and veins. The whole chilies are medium spicy. Removing the seeds avoids the makhani sauce from becoming overly spicy.
In a large cooking pot (4 qt or larger), heat up the oil on medium heat. Add the green cardamom pods and cinnamon stick and fry for 8-10 seconds.
Add the onions next and fry them for about 3-4 minutes just until they soften slightly. Do not brown the onions.
Next, add the deseeded whole red chilies, cashews, ginger, and garlic. Fry everything together for 1–2 minutes.
Lower the heat to medium-low and add the butter along with the kashmiri red chili powder and turmeric powder. Adding butter at this stage avoids it from browning/burning. Fry the spices for about a minute to let them release their aroma.
Next, add the roughly chopped tomatoes and sprinkle the salt & sugar.
Mix everything together and sauté on medium heat for 2–3 minutes or until the tomatoes begin to soften slightly. Do not add water. We are going to develop concentrated tomato flavor by cooking them in their own juices.
Once you see that tomatoes are starting to release juices in the cooking pot, add the garam masala and kasuri methi leaves. Turn the heat to low and cover the pot with a tight-fitting lid.
Let cook for 35-40 minutes until the tomatoes are soft and jammy. If your tomatoes are ripe and juicy, there is no need to add any water. Check 1-2 times in between. If needed, add a tiny splash of water. Don’t dry out. Switch off the stove.