Make the Kolhapuri Masala from Scratch: Heat a dry, heavy pan over medium-low heat. Add the dried red chilies, coriander seeds, cumin seeds, peppercorns, mustard seeds, fennel seeds, cloves, cardamoms, cinnamon, and bay leaf. Toast, stirring constantly, for 3-4 minutes until deeply aromatic and a shade darker. Add the sesame seeds, poppy seeds, and curry leaves; toast 1 minute more. Add the desiccated coconut last and toast 1-2 minutes until golden-brown, watching closely so it does not burn. Cool completely, grind to a fine powder, and stir in the turmeric. Set aside.
Marinate the Chicken: In a large bowl, whisk together the yogurt, ginger garlic paste, salt, and 1 tablespoon of the homemade Kolhapuri masala. Add the chicken pieces and toss to coat every piece. Cover and refrigerate for at least 30 minutes (up to 4 hours for deeper flavor).
Brown the Onions and Bloom the Spices: Heat the oil in a kadai or heavy-bottomed pan over medium-high heat. Add the chopped onions and cook for 8-10 minutes, stirring often, until deep golden-brown. Add the curry leaves and ginger garlic paste; cook 1 minute until fragrant. Stir in the chopped tomatoes and cook 4-5 minutes until they soften and the oil begins to separate at the edges.
Build the Gravy Base: Add the 3 tablespoons of Kolhapuri masala and the tamarind water. Stir and cook for 2-3 minutes until the masala darkens and smells intensely fragrant. Pour in the warm water, add the salt, and bring to a boil.
Simmer the Chicken: Add the marinated chicken along with all its marinade. Bring back to a simmer, then reduce the heat to medium-low, partially cover, and cook for 20-25 minutes, stirring occasionally, until the chicken is cooked through (165F / 74C internal temperature) and the gravy thickens to coat the chicken pieces. Add splashes of warm water only if it gets too thick.
Rest and Serve: Take the curry off the heat and rest it 5 minutes. The oil will settle into a glossy red layer on top. Garnish with fresh coriander and serve piping hot.