Spray a saucepan with oil and add onion and bell pepper. Cook for 8 minutes, until tender. Add garlic and cook for 1 more minute. Add tomatoes, tomato sauce, sugar, salt and pepper. Bring to a simmer and reduce heat to low. Cook for 35 minutes. Stir in basil.
Cook pasta according to package directions.
Preheat oven to 350 degrees.
Spoon ½ cup of sauce into a 13x9 baking dish. Add half of the penne, half of the mozzarella and parmesan. Top with ½ of the remaining sauce. Add remaining penne and top with remaining sauce and cheese. Bake for 20 minutes.