In the sauce pan, saute the onion, tomatoes, and garlic in the oil over medium heat until the onions are soft and translucent and the tomatoes are beginning to go mushy, about 10 minutes.
Add half the water and simmer for 5 minutes. Add the rest of the water and spices and stir. Simmer for 5 more minutes, stirring.
Turn off the heat and remove the pan. Cool slightly and puree with the immersion blender.
Chicken
Make a spicy paste by mixing the curry powder and chili powder with a little water. Set aside.
In the skillet, saute the onion in the vegetable oil until translucent, then add the garlic, ginger, and chilis and stir over medium heat for 5 minutes.
Add the curry and chili powder paste and stir in, cooking for about 30 seconds.
Add the chicken pieces and stir until the chicken is sealed well on all sides.
Add half the masala gravy, coconut, and coconut milk and simmer for 20 minutes, stirring constantly. Stir in the remaining masala gravy at the end.
Add the finely chopped cilantro leaves and cook for one more minute.
Serve with whole cilantro leaves sprinkled on top and naan.