|When it comes to assessing performance, your manager merits poor ratings in two categories: in the first place, to put it nicely, he is truth-challenged. Secondly, having missed the deadline for your review and then underrating you, he must also be described as management-challenged. You should address both of these issues.|
As for dealing with the truth, once you hear one lie, it is difficult to know if anything that he has been saying is fact or fiction. At some point, his lack of honesty is going to create problems for you and your associates. At such a point, several of you should meet with him. Tell him that you are confused over what may have happened and need his help in deciphering it. The idea is to send a message that you are not going to take his lying behaviors lying down.
In terms of underrating your performance because of his error, you should tell him that you want written documentation from him indicating that you deserved the highest rating, and this documentation should be placed in your file. Frankly, his rationale for not giving you the highest rating sounds a little fishy too.