Why Dolby Atmos option not available in my iPhone 12 ?

Do you subscribe to Apple Music? If you don't, that's why. If you do, make sure the following is followed:

About spatial audio with Dolby Atmos in Apple Music

If you subscribe to Apple Music, you can listen to select songs in spatial audio with Dolby Atmos. Get a multidimensional experience that goes beyond just listening to music and makes you feel like you’re inside of it. And listen on any headphones, the built-in speakers on your iPhone, iPad, or Mac, and with Apple TV 4K.

Choose how to listen to Dolby Atmos on your iPhone or iPad

1. Update your iPhone or iPad to iOS or iPadOS 14.6. 
2. Go to Settings.
3. Tap Music.
4. Under Audio, tap Dolby Atmos. 
5. Choose Automatic, Always On, or turn Dolby Atmos off.

Do you meet all the requirements?

• Do you subscribe to Apple Music?
• Are you using iOS 14.6?