PC David Norman, 52, of Haverfordwest, Pembrokeshire, made the false statement after being called to a dispute between neighbours in Milford Haven.
Swansea Crown Court heard he was "caught out" by a CCTV recording.
He denies carrying out an act tending or intending to pervert the course of justice.
The court heard PC Norman, who worked for Dyfed-Powys Police, arrested the man for a public order offence on 21 January, 2016.
He later wrote a statement saying he had became "extremely abusive, shouting and screaming" and was swearing.
But John Hipkin, for the prosecution, said PC Norman was "caught out" because the man had CCTV on his house which recorded images and sound and showed he spoke only in a normal voice.
Mr Hipkin said that what PC Norman later told investigating officers might be the reason for the false statement.
According to Mr Hipkin, he said: "I have been in situations with him before when he has been incredibly hostile to me and I have listened to him spouting out abuse and was shocked by his language."
The man was arrested and spent two days in custody before being released, the court heard.
Mr Hipkin added PC Norman "was adamant that he had not done it deliberately nor had he intended to pervert the course of justice".
PC Norman added that he was having personal problems at the time of the incident.
The trial continues.

Alesha Racine wrote to Lord Carey in 1992 after discovering her abuser had returned to the church where she had been sexually assaulted.
On Monday Lord Carey announced his resignation as an honorary bishop.
A review by Dame Moira Gibb found he had failed to pass on information about abuse carried out by Bishop Peter Ball.
Ms Racine's abuser, Michael Walsh, was convicted of five indecent assault charges and confessed to sexual relationships with a further eight children.
He was sent to prison in 1990.
He had been a teacher, a lay vicar at Chichester Cathedral and also ran a choir at a church in Chichester.
After his release in 1992, Walsh returned to the same church to be part of the choir.
Concerned for the safety of other girls, in July of that year Ms Racine wrote to the then Archbishop of Canterbury, George Carey, requesting his help.
Speaking after Lord Carey's resignation, Ms Racine, 54, said: "I was very concerned that my abuser had just come out of prison and it appeared that he'd just gone straight back into the parish church where he'd originally worked, and was again in a position of authority in the choir there where young children - specifically girls - sang.
"I was really worried that these girls were at a huge risk. I felt it was inevitable that children would be abused."
Three months after writing her letter she was told Lord Carey had been unable to consider her concerns because he was "committed to a series of visits overseas, together with his summer break".
She was informed one month later that the "Archbishop had been assured that there was no question of Michael Walsh being reinstated in the choir," but nine months after raising her concerns she received a letter from the Archbishop's chief of staff confirming her abuser was back in the choir.
Lambeth Palace wrote to Ms Racine saying the parish authorities had taken "great care" in coming to their decision to allow Walsh's return to his position "weighing carefully the risk of re-offending against... the Christian duty of forgiveness".
The letters revealed Lord Carey regretted the decision which allowed Alesha's abuser back into churches and offered her his sympathies.
Ms Racine said: "I thought his response was deeply hurtful, in that it had taken me a lot of courage to write to him at all.
"Most of what he said was in defence of the Church and the people in it, rather than try to reach out to me as a victim.
"I do feel it was a complete failure on his part."
A spokesman for the former Archbishop of Canterbury said the correspondence with Ms Racine had been conducted on Lord Carey's behalf by his chief of staff.
He said: "Lord Carey has absolutely no memory of this chain of correspondence or these events. He cannot therefore comment."
A police officer "deliberately lied" in a witness statement claiming a man had behaved in an "extremely abusive" way, a court has heard.
[NEXT_CONCEPT]
A woman who was sexually abused by a lay vicar in Sussex says she was "completely failed" by the former Archbishop of Canterbury George Carey.