What is correct: "You've got to be kidding me" or "You are too kind" [closed]

There is a question in my test that makes me confused. Here is the dialogue and I need to fill in the blank:

A: You are a great dancer!

B: _____. I dance terribly.

That is what I remember (not word by word). I was reluctant between two choices:

You've got to be kidding me.

and

You are too kind.

I knew the former can be used so I chose it. However, after thinking thoroughly I thought the correct choice might be the latter so my final decision was to choose the latter. My reasoning: the former (even though is correct) seems rude. The latter seems much nicer.

When I received the test back. The answer is:

You've got to be kidding me.

In short, I would be grateful if anyone can point out the differences between the two phrases and show some example if possible too. Thank you!

Depends entirely on the context.

Are A&B close friends? Or are they strangers who happen to be making small-talk?

Because if they are close friends, A could have said to B in a jovial way/sarcastic manner and B could have replied with "What? No way! You gotta be kidding me. I dance terribly."

But if this conversation is between 2 people making small talk(strangers who are just getting introduced to each other), then "You are too kind!" sounds appropriate.

A little more context about between whom this conversation takes place will make it easier.