Dolby Atmos not recognized by LG B7 when connected to ARC

Two things:

1. Not sure you should be looking at your TV for confirmation of the fact it is playing Dolby Atmos. What does the Sonos app say?
2. The notification for Dolby Vision on your TV concerns an image format, while Dolby Atmos concerns a sound format. Should you exepect a notification for a sound format on your TV?

1. Sonos app say Dolby Atmos
2. Yes, we expect a confirmation from TV, like the one you get when you watch Dolby vision. 

1. If the app says so, you're getting Atmos, so there's no problem.
2. You'd need to look at your TV's manual if you are right to expect the same confirmation for sound formats as you get for image formats on your TV - the fact you're not getting this confirmation on your TV, while you do get it from the Sonos app could mean your expectation is wrong.

Good news is: you are getting Atmos!

Thanks for you reply, see the notification above when I turn off “SIMPLINK HDMI-CEC, however this settings will shift the sound to TV internal speakers. When I change this back to HDMI-ARC, don’t see this notification pops up. Instead I see only Dolby vision. 

How on earth is the TV going to know what is playing on a downstream external speaker? Of course it doesn't display Dolby Atmos. It doesn't know the Arc is capable of Atmos. It doesn't even know it's an Arc.

When it's on internal speakers it has the audio information to display, as in your screenshot.

Ah, right. Maybe it's as @John B says: when playing to an external speaker the LG cannot know that speaker is playing Atmos, so there's no notification. Because the LG is playing the picture on it's own screen, there is a notification for the puicture format.