This, a thousand times! Our criminal justice system is in fact based on penance, but forced penance is a flawed concept. In order to get a lighter sentence (or later parole) perpetrators are expected to show penance for what they did, but they are coached in what to say so it is usually a lie which causes a rift between society and the offender which is almost irreparable.

This follows a line of "counter-culture" mentality, an us-vs-them mind-set which is divisive and self-reinforcing. The same problem comes with the war on drugs, if someone experiments with drugs at a young age and consequentially finds that they like drugs then they are forced into a counter-culture where escape is difficult at best.

Edit: removed some superfluous words for readability.

Wrong choice of words, you're right.

"Expiation" might be the word you're looking for.

I would say that "expiation" is not a suitable word. Incarceration neither compensates those who are wronged, nor does it atone / redeem -- the incarcerated person is still typically regarded a criminal / felon upon release.