The court said there were contradictions at "each and every point" in the prosecution version and the accused cannot be convicted in such circumstances.
The man was accused of disrobing and attempting to rape the two sisters, aged seven and four years, who were known to him. Prosecution said the alleged incident took place in April 2015 when the girls' mother had gone to her work place and they were alone at home.
The court absolved the man, a resident of Sultanpur in Uttar Pradesh, of charges of rape and criminal intimidation under the IPC.
The court said the younger sister was not medically examined for the reasons known to the investigating agency and the medical report of the elder sister was "totally contrary" to the depositions of the victims.
During the trial, the man took the defence that he had some money transactions with the late husband of the complainant, mother of the two girls, and when he demanded his money back, she lodged this false case.