if you try to create a new chiseled block underwater by placing a bit, it won't let you because the game thinks there is a block there. You can get around this by placing a single bit outside of water and bringing it back underwater, or by taking a full block and chiseling it down to size underwater, but ofc it's not ideal

potential solution would be to replace the block of water with a waterlogged chisel block or in the case of flowing water, just replace it with a dry chiseled block (just like waterloggable blocks behave when placed in water)

https://gfycat.com/IdenticalSelfishAmericanindianhorse
clip of the issue