If you notice on the Now Playing screen in the Sonos app, when the audio format is displayed, it is displayed in actual text EXCEPT when you are playing Dolby Atmos content which displays the Atmos logo instead. You probably aren’t seeing “Dolby Atmos” displayed on the notification because the Sonos app uses the Dolby Atmos logo rather than text. But rest assured, as long as you see the Dolby Atmos logo on the Now Playing screen or “Dolby Atmos” under About My System, Dolby Atmos audio is playing.

Thanks for your reply , this is what's on the now playing screen , was just curious as to why it wouldn't show in the drop down 

See my answer above. The Sonos app uses a Dolby Atmos image rather than actual text. The script for the notifications window is probably only designed to display text only, not an image. Maybe one day, Sonos will adjust this.