How do you patch the NULL value or Blank value to the LookUp field of your D365 Entity from your app?
Could you please share a bit more about the formula that you used?
It is a common issue within PowerApps, there is no direct way to patch a NULL value to a LookUp column in Dynamics 365 Entity. The user @Sanoj has shared an alternative solution for similar issue, please check the response within the following thread:
I have done work around by creating another string field and updating that string field from powerapps and then Plugin will take value from that string field, finally plugin will update my lookup field. If its null then I store value as "null" in string field and if its not null then I store guid of that record in it.
Then I update that lookup field based on that string field, if it is containing "null" as string then I update lookup as null or if it storing GUID then I update it with that GUID.
I will update the code and method if there is any better solution comes up in future.