Lennon was serving a touchline ban when he was charged with misconduct for his “behaviour on the night” of the Old Firm match on 2 March.
That charge led to a further four-match ban and the SFA indicated that the two bans would run consecutively.
But the SFA have admitted that this is “legally unenforceable”.
Therefore, by the time Lennon is allowed back in the technical area on matchday, he will have been suspended for five games rather than eight.
And Celtic say they are “pleased that the SFA has recognised that Celtic’s position is absolutely correct”.
Lennon was dismissed to the stand during Celtic’s 2-0 defeat by Hearts in November and was given an excessive misconduct charge for his behaviour during the match at Tynecastle.
The sending off incurred an automatic two-match ban, while an extra four games were added for Lennon’s heated exchange with match officials.