Heat 1 tablespoon of oil in a large pan on medium-high heat. When oil is hot, add chicken. Season with salt, pepper, Italian seasoning, garlic powder, onion powder and paprika. Mix well and sear chicken all over until browned and cooked through, about 5-6 minutes. Transfer cooked chicken to a plate; set aside and keep warm.
Heat remaining oil in the same pan with 1 tablespoon of butter. Add the mushrooms and cook, while stirring, until just beginning to brown and soften, about 3-4 minutes.
Add the remaining butter to the pan. Let melt and sauté shallots and bell peppers until just soft and fragrant, about 3 minutes. Add the garlic and sauté until fragrant, about 30 seconds.
Add the chicken back into the pan along with any juices released while resting. Mix through all of the ingredients to evenly coat in the pan juices. Continue cooking until all vegetables are soft and the chicken is cooked through, about 1-2 more minutes.
Taste test and season with salt and pepper, if desired. Serve warm.