It is in Naruto Shippuden, episode 54 'Nightmare'.
This episode is available to watch at narutoget.com
Note: This episode does not need to be download to watch it, or any of the other episodes at narutoget.com
Chat with our AI personalities
episode 333 or 332 one of them
Its when naruto, sakura, and sai go on their first mission.
Sai didn't actually call Ino gorgeous. He thought that if he called her a nickname based on her personality traits or appearance, then they would get mad. So he decided to call her the exact opposite, beautiful, by which he actually meant ugly.
In 3rd Naruto Shipuuden Movie
Naruto Shippuden episode 57, -JC