I am trying to create a hole by using the bool tool. However it is removing the whole object. Why is that?
Because of the concave part of the object, the Subdivision Surface modifier creates some nasty geometry on the n-gon:
To get rid of that, you can simply select a vertex on the border of this concave part and one on the other side of the n-gon, then press J to connect them and split the face there:
Repeat that on the backside of the object and the Boolean Modifier works as expected:
Boolean is the last resort to create holes, because it generally generates bad topology that you need to fix afterwards.
Here it looks like the Subdivision Surface of the palette makes the Boolean fail, so press Ctrl-, but move the Boolean modifier above the Subdivision Surface, apply the Boolean, fix the topology, reactivate the Subdivision Surface.
Here, I've created additional edges and I've bevelled the hole edges: