Hardik,

Canceling the chaining move would not be a good practice I think.
What we can do is, try to reach to the depth of the chaining location and 
return picking to the supplier from that last chained location.

Indeed in you fix you tried to do that but you did not reach to the depth 
location.

For example, we have chaining like, stock > shop 1 > shop 2,
Currently return picking is considering from stock (creating stock -> supplier 
return move),
Instead we should consider the last chained location (shop 2 in this case) and 
create
shop 2 -> supplier return move. So ultimately it will send back goods from the 
final location in which we had goods priorly and our stock level will not be 
altered.

Kindly check all the possible test cases.

Thanks.
-- 
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