can I put i7 8th gen processor in dell optiplex 7040 , I want to make sure.

Unfortunately, the OptiPlex 7040 series does not support 8th gen processors.  You still can install Windows 11 on that system.  It will work, although it is not officially supported. 

chino is correct.  7040 has intel 100 series chipset which does not support 8th gen cpu.  you can put a 7060 MT motherboard in 7040 MT.  7060 has intel 300 series chipset which supports i7-8700.  https://www.hardware-corner.net/compare/Dell-OptiPlex-7040-MT_vs_Dell-OptiPlex-7060-MT/

7060 chassis front are identical to 7040 MT. but the back IO are different so you will need to mod the case back panel to fit 7060.  you also need to use a different 6 pin psu for 7060.   7040 uses 8 pin psu.

Front I/O panel is not the same. 7040 has 2 USB 3.0 slots.  7060 has 1 USB 3.0 slot and one USB-C slot.  Sounds like it's easier to just buy a 7060.

Re: I always wanted to update it to windows 11 

OP could replace the front bezel.  if the cost of a complete 7060 mt is better than motherboard, then yes

or just do what chino recommended.  Can win 10 oem license on 7040 automatically activate Win 11 if OP decides to install it?  Win 11 will automatically download drivers for 7040.  there is no Dell Win 11 7040 driver, but the Dell win 10 driver might work in 11 too.

Not just the cost of an MB, but the cost of a PSU and front bezel.  Then still have to modify the back of the case for the rear I/O panel.  In that case, not speaking of Win11, it's easier to just buy a 7060 instead of doing all those mods.