A Surry Hills restaurateur accused of torching his own establishment and killing his dog originally told police a mysterious assailant asked him, "Do you like to burn?" before he was knocked unconscious.

Angelo Ziotas, owner of Crown Street restaurant Essenza Italian, was refused bail by a magistrate on Saturday morning after police alleged the story he told them about waking to a burning building was a ruse.

Police have accused the owner of Essenza Italian, Angelo Ziotas, of lighting the fire. Credit:Louise Kennerley

The Parramatta Bail Court heard Mr Ziotas, 37, went to the bathroom window and yelled for help, with passers-by rescuing him from the burning building by gaining access to the roof at about 11am on Thursday, July 4.

According to court documents, Mr Ziotas' Kelpie, Lexie, died of smoke inhalation as a result of the blaze. The restaurateur was then taken to hospital where he was treated for stab wounds to his back.