As it is said that everything in this universe is made up of atoms and molecules and atoms are called the building blocks of matter. But then why the cell is called the basic unit of life, why not atoms?
Cell is usually considered to be the basic unit of life. Of course, cells consist of atoms, but atoms do not satisfy the criteria of being alive in any meaningful sense.
From the physicist point of view a cell can be considered a heat engine: it takes energy from the environment (e.g., in the form of sugars), uses this energy to produce useful work (maintaining its own functioning, growing, replicating), and rejects the unused energy as waste. An atom cannot do any of this.
A highly disputed case is whether viruses can be considered among the living things. Viruses are collections of complex molecules that are able to replicate, but which do not possess the above described capacity of producing useful work themselves - they rely on living cells for doing it. Still, viruses replicate, undergo evolution, etc. - this is why some argue that they should be considered as living things.