A firearm must be clean to function properly and is not designed for use as a blunt weapon.
The way I interpret the scene is that the gun is damaged too badly to fire correctly. By some miracle the cylinder must have been bent in such a fashion that the pin hit the cartridge and discharged the bullet which then must have impacted the cylinder or the barrel-housing in such a way that it broke the weapon without outright exploding.
A sufficient amount of foreign material, in effect blood, could have produced the same result. Also, he was using a snub-barreled .32 which is a small caliber meant for concealment and reliability. I can't imagine a larger caliber would have discharged improperly without damaging the shooter and certainly break the weapon much more extensively.
Here are the images i used to identify the weapon, any experts feel free to correct me but I believe we are talking about a type of weapon infamously known as the Saturday Night Special:
I also imagine this is how Billy Batts survived getting shot in the mouth, most of the bullet is lodged in the broken weapon and the energy was expended on breaking the cylinder out of the frame.