As one of the three officers who attended the incident attempted to put the man into the back seat of the police car a brief struggle ensued, the IPCA found.
During the fracas the officer struck the man with his knee - hitting him in the face.
The man later complained about his treatment to police, who then notified the IPCA.
One of the officers told the IPCA the man "was compliant all the way until [another officer] mentioned that he's gonna stay the night [in the cells] and then he just fired up".
An officer, believing he needed to prevent the man from kicking or head-butting him, then aimed his knee at the man, intending to strike his thigh, he told the IPCA.
"I was trying to give him a dead leg ... I didn't want to get hurt," he said.
However, the knee struck the man's head at the "same time he bent down at the waist" in a "staple shape" causing a bloody nose.
The man told the IPCA he was handcuffed as "one of [the officers] beat me while pushing me into the back seat of the car".
He said he was unconscious for a period and when he awoke, the car was moving and he had blood coming from his face.
Photographs of the man's injuries, the IPCA said, show a very bruised and swollen eye.
The man was seen by a doctor after he arrived at the police station but was told he did not need to go to hospital, and could remain in custody until his court appearance the next day.
However, after returning home, he saw his doctor, who referred him to hospital for scans and further assessment - revealing a fractured nose and eye socket.
An independent witness also told the IPCA he heard what sounded like a fight breaking out across the road.
He said he saw the man being escorted across the road towards a police car and was being held under each arm. The witness described the man as "limp", with his feet "dragging".
He said the officers "sort of manhandled him head first into the back seat of the car" and it did not look like the man was resisting.
However, the witness did not see the man kneed to the face.
Superintendent Tania Kura, the Eastern District Commander, said in a statement that knee strikes are an approved technique, which are taught to recruits and in police tactical training.
"I'm satisfied that the officer's action was appropriate given the circumstances, and that the injury to the man – while unfortunate – was accidental," she said.
"The officer's motivation was to pre-emptively protect himself from an assault, and the IPCA has noted that he used a minimal and reasonable level of force to do so."