In a shallow bowl or plate, add flour, Italian seasoning, paprika, garlic powder, onion powder, salt and pepper and mix well. Set aside.
In a separate shallow bowl, add egg and water and whisk well. Set aside. In a third shallow bowl or plate, add panko crumbs and set aside. Heat about 1" of vegetable oil in a skillet over medium high heat until hot.
Carefully dredge chicken breast into flour mixture, coating both sides, and shaking off excess. Dredge into egg, coating both sides and finally panko bread crumbs, coating both sides and covering the chicken completely.
Carefully place the cutlets into the hot oil (once it reaches 155-160 F.) and heat on one side for about 6 minutes or until golden brown. Carefully flip over the chicken and continue to heat for an additional 6 minutes or until golden brown.
Set on paper towel or on a wire rack for 5 minutes before serving.