A person is sponge knocking if they say that they tried to pay a debt to another person, but lied about it.
Person 1 "Man I tried to pay you...knocked on the door....no answer"
Person 2 "Oh yeah? Knocked all night at my door...was in all night, were you knocking on the door with a sponge?" Hence called sponge knocking. "I was accused of sponge knocking...but i really tried"