If you just ask that question, "che ora è? " ( "What time is it?" ) is correct "IS IT?", but If you add an introductory clause to be more polite, then don't change the subject-verb order: i.e. Excuse me, do you know what time it is? Can you tell me what time it is? I wonder what time it is.
True, I wouldn't normally use that phrase and I would say "Excuse me, do you know what the time is?". But I've found Duolingo sometimes punishes you for getting "creative" with a translation so I try to keep it as literal as possible. I definitely didn't expect it to mark "ora <> hour" wrong, though.
A British English speaker would be unlikely to say "do you know what time it is?" unless they had just been woken by the phone at 3am. Which would not require, "excuse me" to precede it. We would ask a stranger, "excuse me, do you HAVE the time?". If you were to ask a Brit, "excuse me, do you know what time it is?", the likely answer would be "yes".