ESP8266 Community Forum

I have an ESP8266 which I have interfaced with atmega16L, powered both through LM1117 (3.3V). I have tested the Tx-RX of my board/controller using a CP2102 USB module that I have and it works fine. I have also tested my ESP8266 through it and that too works. If I connect this USB module Dout to board, board TX to ESP8266, and output of ESP8266 again to DIN of USB module(forming a triangular topology), and send AT commands to ESP, I receive OK response on my PC terminal. But if I connect both Tx-Rx of ESP8266 to Rx-Tx of atmega, the output response of 8266 is garbled. The same program works for triangular topology mentioned above. So my doubt is, is there a problem in direcctly connecting Tx-Rx pins of ESP to atmega? I have even tried inserting resistances in rage of 330ohms to 1K instead of direct connections. Has anybody faced a similar problem?