That was mostly a myth created by himself to paint himself in a better light and to appeal to patriotic Germans. While it's true that he was stationed at the Western front he did not fight on the front lines. Hitler was a "Meldegänger", a dispatcher of messages, and he was stationed safely many kilometers behind the front line where grenades couldn't reach.

Edit: To directly answer your question concerning the gas attack, that part is true. Hitler's regiment fell victim to a British gas attack during the final weeks of the war. He was temporarily blinded and transferred to a hospital.