Simply saying, “I can’t because I’m busy” is all that needs to be said. What you put is not the correct way of speaking.

You can't use I suppose not unless Person B has posed a Question. To Person A. B: seeing as you are busy with your homework we had better not go out tonight! A: I suppose not ->followed by something that makes the response less abrupt and moronic. B: seeing as you are busy with your homework we had better not go out tonight! A: I suppose not I really must complete my assignment I want to do well in the exams. But I suppose not should really be avoided in the context and situation you describe it has the possibility of being a bit rude and uncaring. On the part of Person A

Your answer is incorrect in the context. For example an appropriate question to your answer would be something like: Are you going to the beach today? I suppose not, it's a bit cold.

I would like to give my answer though I am not a native speaker. Possible answer could be " A: do you want to hang out with us? B: I would love to, but I am occupied with work . " Correct me if I am wrong. Thanks 🙏