@vijayan t
I'm glad that you were able to resolve your issue and thank you for posting your solution so that others experiencing the same thing can easily reference this! Since the Microsoft Q&A community has a policy that "The question author cannot accept their own answer. They can only accept answers by others", I'll repost your solution in case you'd like to "Accept" the answer.
Issue:
SCIM provisioning of users that are assigned to a AD Group:
When a user is added (provisioned) to a group it works correctly by sending the create group followed by patch group.
When a user is removed (deprovisioned) from the group it does not send a PATCH /Groups/{Id} with the corresponding payload to remove member of the group.
Solution:
Tutorial: Configure Dropbox for Business for automatic user provisioning
When configuring automatic user provisioning for Dropbox for Business in Azure AD. You can Define the users and/or groups that you would like to provision to Dropbox by choosing the desired values in Scope in the Settings section.
Choosing only the assigned users allowed you to remove users, when "Sync all" users caused the issue.
If you have any other questions, please let me know.
Thank you again for your time and patience throughout this issue.
Please remember to "Accept Answer" if any answer/reply helped, so that others in the community facing similar issues can easily find the solution.