The image field in a Smart Form can be configured two ways.
Option 1: Value is an element
<FieldName>
<img src="{path}" alt="{text}" />
</FieldName>
In this case, the Image attributes are preserved.
Option 2: Value is plain text
<FieldName>{path}</FieldName>
In this case, only the path is stored as a plain text string.
Based on your description, I'd guess you're using Option 2 when you want Option 1.
See red outlined area here: