Can I know if there is any way to ignore the DTD reference, if any, from the
xml file while performing the Transformation? I am using Java (1.4.1)'s API
for Transformation.

Have a look at
 http://www.w3.org/TR/REC-xml#sec-rmd
or even remove the doctype decl completely.
If you don't have control over the incoming XML, in most
cases (known encoding) filtering the stream passed as input
can do the same trick.
Also check whether supplying a custom entity resolver
returning an emty source for the DTD system id is acceptable
to you.
Of course this depends whether I guessed correctly what you
meant by "ignore the DTD reference".