Tricky one. If i am ddo i will ask PAN because if the same is paid, i will require this for verification. If not verifiable, individual can claim directly in ITR to satisfaction of IT Dept. What is the prob in producing it. In rental agreement itself incorporate the PAN along with a copy enclosed. This should solve the issue. If the House owner is not having PAN that means he is trying to cheat govt. And if one opted such a house owner, nobody can help. So PAN is required. DDO can even insist PAN for below 1 lak cases since, for verification DDO can call for any documents failing which the individual can file in ITR.
Allowability of Deduction by the Employer/DDO : The drawing and Disbursing Officers should satisfy themselves about
the actual deposits/subscriptions/payments made by the employees, by calling for such particularly information as they deem necessary before allowing the aforesaid deductions. In case the DDO is not satisfied about the genuineness of the employee's claim regarding any deposit/subscription/payment made by the employee, he should not allow the same, and the employee would be free to claim the deduction/rebate on such amount by filing his return of income and furnishing the necessary proof etc., therewith, to the satisfaction of the Assessing Officer.