Can the brain atrophy caused by b-12 deficiency be reversed?

Sometimes. When B12 deficiency is treated with B12 (also known as cobalamin), all hematologic symptoms (i.e. Anemia) should reverse and neurological symptoms usually start improving after 3 months with maximal improvement at 6-12 months. For unknown reasons though, sometimes the neurological symptoms persist and even progress even after cobalamin treatment.
Not likely. Atrophy is structural change, brain repair is dependent on the age of the individual.