Hi,
I'll go with Anand's suggestion. What seems to me is a wrong approach here. You don't reverse the original document (which triggered the inspection lot) if the valuation is not OK.
Another aspect is that qty is going to be posted in unrestricted stock in anyway. Only difference is that you call two locations by the names of Target and Source. That's pretty fine but why do you want to cancel the document?
What is the next process when this material is back to Source after quality inspection? More information on this might be helpful for a better solution. Else, Anand has already suggested the feasibility.
ntn