Option A is correct. 'was sitting' is in the past continuous tense. It indicates that when the phone rang, Peter was siting. Hence, it meets all the required conditions.Option B is incorrect. 'has been sitting is in present perfect continuous tense. As the sentence talks about an event of the past, a verb in present tense cannot be used.
Option C is incorrect. 'sitting' is an incomplete verb as it is not accompanied by an auxiliary. Thus, it will make the sentence grammatically incorrect.
Option D is incorrect. 'had had sitting' itself is a grammatically incorrect phrase as it consists of an auxiliary and two main verbs. Two main verbs cannot be adjacent to each other unless separated by a comma.