The admission came after the Hindustan Times reported that Indian soldiers had shot "hazy videos" of faked battles on the Siachen glacier last year, posing as dead enemy troops and even destroying one of their own bunkers.
Indian and Pakistani troops have been deployed since 1984 on the snowy wastes of the Siachen glacier, north of the disputed Himalayan region of Kashmir. It is one of the world's most inhospitable places, where more soldiers die of cold and altitude sickness than through enemy action.
"Based on certain complaints that enemy killings have been fabricated by one unit in central glacier, a court of inquiry was ordered," the Defence Ministry said on Friday.
It said a major had been found guilty of "having faked killings of some enemy personnel and destruction of enemy bunkers". The officer faces disciplinary action.
The Hindustan Times said that a third of the 50 killings of Pakistan soldiers attributed to Indian troops on the Siachen glacier last year may turn out to be false.
To make their claim realistic, Indian troops built an air defence bunker on their side of the glacier and destroyed it with rockets and mortars, claiming it was a Pakistani bunker, the newspaper said.
But the ministry said nobody had been given any awards for the faked battles.
"The system of awards and citations is absolutely foolproof and above board. There is no question of anyone receiving awards and citations for false claims," the ministry said.
India and Pakistan have observed a ceasefire on Siachen since November.