"Boko Haram came to our village last night at about 8:00 pm (1900 GMT) firing guns and RPGs (rocket-propelled grenades)," Bulama Bukar, who lives in Alau-Kofa, told AFP.
"Two people were burnt alive and the whole village was burnt, along with our food."
Bukar, whose father was shot in the leg during the attack, said the jihadists "specifically came to steal our cattle" but were forced to abandon the herds when soldiers arrived.
"Last Wednesday they attacked the village, killed three people and took away 50 cattle. And now they came back," he added.
A security source in Maiduguri, who asked not to be identified as he was not authorised to speak to the media, confirmed Bukar's account.
"It is part of the fightback strategy by the terrorists, who are facing mounting pressure from the military," he said.
Nigeria's military said last week they had cleared the Sambisa Forest in Borno state of Boko Haram fighters -- just over a year after making a similar claim.
Theatre commander Major General Nicholas Rogers was reported as saying in Nigeria's media on Monday that the Islamic State Group affiliate was "completely defeated".
But the security source warned against premature triumphalism, despite recent successes.
"Saying they have been completely defeated is pushing it too far," he said.
"They have indeed been pushed out of Sambisa. They have relocated their camps to Dubur and Yuwe on the rear fringes of Sambisa."
But the source said troops remained cautious about hunting down Boko Haram factional leader Abubakar Shekau, as he was using hostages as human shields.
They include some of the schoolgirls abducted from the Borno town of Chibok in April 2014 and female police officers seized in an ambush last year.
"They don't want to harm them, which is why they are limiting aerial offensives," he added.
In January, troops from Nigeria and its neighbours Cameroon, Chad and Niger got as far as Lagara village, across the river from Shekau's hideout in Parisu.
But they were forced to abandon the mission because of landmines and the discovery of the human shields, the source added.