Hello Anukalp,
In link-state routing protocols, filtering advertised or received prefixes is almost impossible. This is due to the fact that the prefixes are advertised in Link State Advertisements, or LSAs, and a router is strictly prohibited to modify other router's LSAs - which is exactly what you would be doing with distribute-lists.
In OSPF, you can use distribute-list in to make it appear that some of the prefixes learned from other routers did not make it into your routing table. The truth is, however, that you have only prevented these prefixes from being installed into your routing table but you have not changed the link-state database or LSAs in any way. As a result, all your surrounding routers will still see that prefix and will install it into their routing table. This will most probably cause traffic blackholing or misrouting.
I am sorry to disappoint you but there is almost no way of accomplishing this kind of route filtering in OSPF. The only place where you can legally do route filtering in OSPF is on area boundaries, specifically configuring the ABRs to filter out certain prefixes when creating LSA-3. You would therefore need to judiciously partition your network into multiple areas and filter on ABRs.
Best regards,
Peter
