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Sajjad1994
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IMO it is B because the subject and object are correctly placed. Subject is 'referee's lack of alertness' and object is penalised players. The sentence makes sense even if 'players' isn't mentioned.
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Official Explanation

The original confuses two sources of punishment, the “referee’s lack” and the referee himself, resulting in awkward use of “who” and needless use of both “punished” and “penalized.” (C) better manages to link “referee” and “who,” but it still requires both “punished” and “penalized.” (D) and (E) change the meaning, (D) by implying that the referee is conscious of his “lack,” (E) by adding “brutality.”

The correct answer is (B).
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why C is wrong.. it is the only choice where pronoun who refers back to referee
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