Can we use CNN to perform Dimensionality Reduction? If Yes then which layer is responsible for dimensionality reduction particularly in CNN?

Yes, CNN does perform dimensionality reduction. A pooling layer is used for this.

The main objective of Pooling is to reduce the spatial dimensions of a CNN. To reduce the spatial dimensionality, it will perform the down-sampling operations and creates a pooled feature map by sliding a filter matrix over the input matrix.