Add chopped tomatoes and soaked cashews to a blender.
Blend into a smooth, fine puree. Set aside.
Heat butter in a wide pan over medium heat.
Add Kashmiri red chili powder and immediately pour in the blended puree.
Cook, stirring frequently, until the gravy thickens and butter begins to release from the sides (about 8 to 10 minutes).
Lower the heat and add salt, sugar (if using), and garam masala.
Add paneer cubes and gently mix to coat them in the gravy.
Pour in fresh cream and simmer for 3 to 4 minutes. Do not overcook.
Crush kasuri methi between your palms and stir it into the curry.
Adjust consistency with warm water if needed.
Turn off heat and let the curry rest for 2 minutes before serving.
