While one sailor was killed, four others are still missing in the accident and a search and rescue operation was on to trace them.
Navy officials said the Board of Inquiry will look into the various aspects of the accident and find out what led to the sinking of the 31-year-old vessel.
The vessel had sunk at 8 PM on Thursday night while it was on a "routine" mission to recover practice torpedoes fired by fleet ships during a "routine" exercise, a Navy statement had said.
The vessel experienced flooding in one of the compartments, they said.
"One sailor has lost his life during the rescue operation and four personnel are reported missing. Twenty three personnel have been rescued safely by the Search and Rescue (SAR) ships dispatched to the area," it said.
The ship was built by Goa Shipyard Limited in 1983 and has served the Indian Navy for the last 31 years. The latest accident is one of the many in the series that the Navy has witnessed over the last year.
Dhowan took over as the Chief of the Naval Staff on April 17 after his predecessor DK Joshi quit in the wake of a series of accidents.
Admiral Joshi's resignation came immediately after a fire on the INS Sindhuratna, which left two sailors dead. On October 31, INS Kora suffered minor damage after it was scraped by a merchant vessel near Visakhapatnam