Undoped and tin doped cadmium oxide (CdO) based thin films are prepared on corning glass substrate by sol-gel spin coating technique. In the present work the charge nutrality level (CNL) in highly conducting CdO thin films is demonstarted by the observed variation in the band gap upon annealing and doping. The increase in crystallite size with tin doping is a signature of decrease of CdO stoichiometry by substitutional replacement of Cd with Sn. Each Cd2+ ions are substituted by Sn2+ ions with reduction of Sn4+ via creating oxygen vacancies in the lattice which also enhnaces the carrier concentration in the tin doped thin film. The band gap enhancement can not be explained by Burstein-Moss Shift (BMS) only but can be explained in the frame work of CNL. The level of local CNL resides at the branch point of virtual gap states (ViGS) generation of which is the consequence of tin doping in CdO lattice. Further investigations using soft x-ray absorption spectroscopy (SXAS) at Oxygen k and Cadmium M4,5 edge show the reduction of Sn4+ to Sn2+. In CdO the interaction between Cd 4d and O 2p determines the type of band gap of CdO. The indirect band gap due to displaced valence band minima from Brillouin zone centre can be speculated to be the direct consequence of the hybridization of Cd 4d with O 2p states combined with octahedral point symmetry. The analysis of the spectral features has revealed an evidence of p-d interaction between O 2p and Cd 4d orbitals that pushes the valence band minima at higher energies which is symmetry forbidden at Γ causing a positive valance band dispersion away from the zone centre in the Γ ~ L, K direction. Thus, origin of the CNL is attributed to the high density of the Oxygen vacancies as confirmed by the change in the local electronic structure and p-d hybridization of orbitals.By further irradiating the thin films with 84 MeV Si6+ and 120 MeV Ag9+ ions with fluence 5e12 ions cm-2 we found an unusual band gap enhancement via generation of oxygen vacancies due to huge electronic energy deposition inside the lattice by Ag and Si ions.The electrons from oxygen vaccancy would fill the ViGs more above the conduction band mininma and as a result the Fermi level tends to be more towards the CNL and a band gap enhancement is observed which has been substantiated by developing an schematic block diagram.