In a large nonstick skillet, heat oil over medium heat. Add onion and cook until onion starts to get translucent, about 3 minutes. Push onion to edges of pan and add Italian sausage. Break sausage apart with a wooden spoon as it cooks. Cook until no longer pink, about 4 minutes.
Add garlic, Italian seasoning, and red pepper flakes and cook 30 seconds. Season with salt and pepper and stir in the tomato paste.
Scatter pasta over meat. Pour tomato sauce, diced tomatoes and water over pasta and sprinkle sugar on top. Bring to a simmer and cover pan. Reduce heat to medium low and simmer until pasta is cooked through, about 25 minutes. Be sure to stir every so often to ensure pasta cooks evenly.
Once noodles are cooked through, turn heat off and gently stir in Parmesan and Mozzarella cheese. Season with more salt and pepper if desired. Dollop the ricotta cheese on top and sprinkle with basil.