That’s an easy one. The validators at Kentish Town are set to continuation exit because ordinarily they are inside a gated station. Of course they aren’t at the moment because of the rebuilding work. Because Kentish Town West also has validators they can’t tell which way you’re going so with an open continuation exit the system assumed exit.
Do let me know whether TfL respond appropriately with a refund.
Small point: you had an incomplete journey charge rather than a penalty fare.