pronouns - Can 'it' be used to refer to a person?

I read a dialogue. It went like this:

A: Is this your family？
B: Yes, it is.
A: What a big family! Is this your sister?
B: Yes, it is. Her name is Linda. (I think this should be "Yes, she is")
A: Are these your grandparents?
B: Yes, they are. My mum's parents are on the left.

I was confused here by "Yes, it is". I believe it should be "Yes, she is", because "it" generally is referring to person instead of object. But is there any exception, for instance, this dialogue?

Also, 'it' generally is referring to a thing, animal and baby instead of an adult. Isn't it?