Sheikh Shadi Alsuleiman faced questioning over the comments at a Royal Commission on Antisemitism and Social Cohesion hearing in Sydney on Friday.
The Australian National Imams Council (ANIC) president agreed council member Ibrahim Dadoun should not have made the comments he did one night after the terrorist attacks in Israel.
Sheikh Dadoun told a crowd at Lakemba, in southwest Sydney, attacks on Israel were an act of resistance.
"I'm elated, it's a day of courage, it's a day of pride, it's a day of victory - this is the day we've been waiting for," he said.
"What happened yesterday was the first time our brothers and sisters broke through the largest prison on Earth."
At the commission, Sheikh Alsuleiman conceded the comments could be construed as Sheikh Dadoun being elated about the breaching of a border fence by individuals in southern Israel and considered October 7, 2023, a justified act of retaliation.
The attacks by terror group Hamas killed 1200 people and resulted in 250 more being taken hostage, according to Israeli tallies.
More than 69,000 people have been killed in Gaza since Israel's counteroffensive, according to local health authorities.
Sheikh Alsuleiman said the council's leadership asked Sheikh Dadoun to release a statement addressing his comments.
"After he explained himself, it was very clear he did not condone or support the killing of innocent civilians, whether they are Palestinians or Israelis, and he made a public statement on that," he said.
He defended Sheikh Dadoun not facing further punishment because the council did not wish to push influential leaders from the fold.
"Our philosophy is we believe … guiding (imams) through those mistakes and keeping them within the fold of ANIC is a lot more healthy and helpful for the organisation, for the individual and for the community," he said.
"We believe that the comments that (Sheikh Dadoun) made on the eighth of October are inappropriate."
Sheikh Dadoun's comments in Lakemba drew condemnation from leaders at the time.
Prime Minister Anthony Albanese said: "There's nothing to celebrate by the murder of innocent civilians going about their day."
Earlier in his evidence, Sheikh Alsuleiman pushed for more approved religious education centres on Australian soil.
No Australian institutions could graduate leaders with the traditional understanding of Islam, he said.
"There are two options: bring imams from overseas, or send Australian Muslims to study overseas, and both have challenges," he said.
He suggested teaching Australian-born imams and female religious leaders at a Tertiary Education Quality and Standards Agency-registered institution would help address a "big gap" in understanding Islam in the Australian cultural context.
The commission will hear from police and corrections sources later on Friday.
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