Well it should happen on preset dates in the game. However after further testing last night and looking in the game files, the conning towers are not being upgraded (cut down) after the dates specified within the file. This appears to be a bug introduced in the 1.2 patch.
I'm running a Gato in 1943 with a 1942 conning tower. It looks like the date of the upgrade to the 1943 tower and skin (boat is no longer painted black and gain a forward AA gun) is between late March and early April. This should pretty much mean that the conning tower should be upgraded when you return from your first patrol. However, I finished another patrol last night, which puts the date at June 28th 1943.
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