[Almostmikhail]

Is it possible to use blade to cut out contour of inkjet printed vinyl paper and transfer that onto a t-shirt?

 

[splathead]

Yes, or scissors.

 

[Almostmikhail]

My scissor cuts don't look that smooth. Does using a blade come out a bit more smoother?

 

[TABOB]

My scissor cuts don't look that smooth. Does using a blade come out a bit more smoother?

It depends on your craft knife skills.
Using a sharp blade and applying light pressure does help.
You will also probably need a cutting mat and a metal ruler for long straight cuts.
The cuts will never look as smooth as those of a plotter cutter, but it will be impossible to tell once the transfer is pressed.