Density functional theory has its shortcomings, most of which are well known (bandgap issue, delocalization, etc.) and thoroughly discussed in the literature. If you stay clear of these traps, plus show that your calculations are converged (k points, basis set size, etc.), then there is no reason why you could not make your case: the theory has been extensively validated for many materials. However, if you touch one of the soft spots of the method (dispersion, charged defects, whatever) then you need to provide higher level of theory calculations (from simple corrections all the way to diagrammatic methods and quantum Monte Carlo). An expert reviewer would be aware of the limitations and point you in the right direction. However, if the reviewer is an expert regarding the material class in question but has no experience with density functional theory in particular (e.g., because s/he is an experimentalist) then it is your responsibility to argue why the level of theory is enough, based on examples and evidence from the very extensive literature. And remember that if the referee raised the question, it is likely that a reader of your paper will too, so you need to consider whether these justifications should also make it to the manuscript, not only the response letter.