Once a penalty has been imposed can it be increased legally because of an oversight on their part.

It is impossible to answer your question from the manner in which it is phrased. You do not specify the nature of the "penalty" or the reasons wy the amount was increased. As a general matter, if the penalty is one for non-payment of tax, the amount of the penalty is required to be properly computed in accordance with a formula, and you are responsible for the correct amount, even if the taxing authority understates it.