According to Osho, Krishna calls Arjuna 'O sinless one' because he speaks to the witnessing consciousness behind Arjuna’s questioning mind—the inner center forever untainted by sin or virtue. By invoking this, Krishna redirects Arjuna inward, away from surface guilt and merit, using the address as a catalytic reminder of his original purity so he can receive deeper wisdom.
Krishna is reminding Arjuna of the spotless self inside him, not praising his outer actions.