I havent seen the incident but perhaps if he thought that itwas a penalty it was within the rules for an automatic red. After being told it wasnt a penalty that then negates the automatic red card, so one decision rests on the other.
The fact that he changed his mind shows that from his view it was a penalty and a red card but after consulting his assistant who obviously had a better view and said it wasnt a penalty hence recinding the red card and awarding a drop ball. It amazes me that with refs retiring at 47 there...