A rotary encoder will likely have glitches on the output as it is being turned which could be seen as a rising edge. Are you doing glitch detection / filtering?
No, I didn't. But I generated a PWM signal with a period of 1 second (with the PSOC itself) and I connected this signal at the input of the counter.And it increment too fast in this case too ( about 1 000 000 steps on a rising edge of the signal).
Which version of the Counter component are you using?
Is it version 1.2 or version 1.5?