Atmega 328P U crash on 5V/1A
Nothing wong, if your power supply is trustworthy enough, then , if u even provide 100000 Amps of current with 5 volt,
your IC won't burn, in your case , it burnt because your power supply seems to be defective, and please check the voltage of the power supply which is supposed to be defective, so it output more than 5 volts burning or crashing your ic...
Note:
I have personally worked with 5 volt 6 amp power supply which is very well precise and my ic is working full fledged without any problems.