Unless a clothes dryer is malfunctioning, towels generally do not develop a burnt smell from being dried too long. Clothing that smells burnt after drying is usually a result of the dryer's temperature setting being incorrect.
Though a higher heat setting is not normally detrimental to towels and sheets, permanent press clothing requires lower heat to prevent the fibers from becoming singed during drying. An overheating dryer can often be fixed by cleaning out lint traps and dryer vents. If the vents and traps are clean, and the dryer still burns clothing, a qualified appliance center should be contacted for repair.