Identify Yourself: Powerful New Rivals

is episode 21 of the original Naruto anime.

Synopsis
Gaara insults Kankuro for his abuse of the kids. Gaara then apologizes to Sasuke for Kankuro's behavior. The three are ninja from the sand village, they are in Konoha for the Chunin Exams! Before Gaara leaves him and Sasuke exchange evil glances, both being impressed with one another.

The Third Hokage asks Kakashi, Asuma and Kurenai to step forward and recommend any Genin they believe to be fit to take the Chunin Exams. Iruka is thinking that the rookies need more time, and that there is no way that any of them will be recommended. However, Kakashi steps forward and recommends Naruto Uzumaki, Sasuke Uchiha and Sakura Haruno. Iruka, already surprised at this, is even more surprised when Kurenai steps forward and recommends Shino Aburame, Hinata Hyuga and Kiba Inuzuka. Iruka once again surprised by this almost has a heart attack when Asuma steps forward and recommends Choji Akimichi, Shikamaru Nara and Ino Yamanaka. All three rookies have been recommended for the Chunin Exams! Iruka steps forward and challenges Kakashi, Iruka believes Naruto and the others are not ready for this exam. Kakashi stands by his decision and the Hokage agrees, but only after Kakashi reminds Iruka they are no longer his students, they are ninja under his command. The next morning Kakashi gives squad 7 the application forms for the Chunin Exams. Both Sasuke and Naruto accept, but Sakura is uncertain.

Later all three of squad 7 are attacked by a mysterious ninja from a different village. Moegi is captured and Naruto saves her, but the mysterious ninja escapes. Sakura is taken by a genjutsu by quickly figures it out, but is still uncertain about the exam and Sasuke easily defeats the ninja, telling him to stay out of his village.

The ninja was Iruka in disguise. He reports to Kakashi, confirming they all passed the test.

Inside the school where registration is taking place some bullies are bullying the students to not take the exam. Sasuke and the main bully begin to kick each other, but a Genin named Rock Lee blocks his kick, surprising Sasuke a lot. Rock Lee goes after Sasuke and challenges him to duel!

Trivia

 * Iruka testing the members of Team 7 is unique to the anime.