Why is it necessary to have PAN?

It is mandatory to quote PAN on return of income, all correspondence with any income tax authority.  From 1 January 2005 it is mandatory to quote PAN on challans for any payments due to Income Tax Department.  It is also compulsory to quote PAN in all documents pertaining to financial transactions notified from time to time by the Central board of Direct Taxes.  Some of such transactions are sale and purchase of immovable property or motor vehicle or payments in cash, for amounts exceeding Rs. 25,000/- to hotels and restaurants or in connection with travel to any foreign country.  It is also mandatory to mention PAN for obtaining a telephone or cellular telephone connection.  Likewise, PAN has to be mentioned for making a time deposit exceeding Rs. 50,000/- with a Bank or Post Office or depositing cash of Rs. 50,000/- or more in a Bank.