The Atman cannot be cut, burnt, suffer any decay or be dried out. The five forces of nature which are capable of destroying physical elements by their combined actions have no influence on the Atman. That is why it is referred to as nitya or permanent or unchangeable.
The soul or Atman casts off its worn out physical body and takes residence in a newer physical body at regular intervals in time. Just like the clothes that we wear do not represent the real state of our physical body, the state of our physical body (which deteriorates over time and is hence impermanent) does not represent the truly unchangeable and permanent nature of the soul that resides within it.
The second day of the Diwali festival, is the fourteenth day of the dark fortnight of the month of Ashvin, and is called Narak-Chaturdashi or Kali Chaudas and also known as Chhoti (-small) Diwali. This day is dedicated to the victory of Lord Krishna over the wicked demon king Narakasur.
Narkasur had fought against neighbouring kings and imprisoned 16,000 women, daughters of the Gods and saints. He had also defeated Lord Indra and taken away the magnificient kundale (earrings) from the ears of Aditi, mother of the Gods. When Lord Krishna learnt about Narakasur’s deeds, he decided to engage him in battle and liberate all the celestials.