Firstly manuscipt 'rejected' and then status changed to 'revise'
It is not really clear what happened. It sounds like the 25 days it was "with editor" it was actually out for review (possibly the editor does the review). It then sounds like the editor looked at the review(s) and decided the manuscript was not "new work". Instead of coming to a decision then, he ask you if the work was new. Your initial response did not convince him, so he rejected the work for not being new. He did not send the reviews, because the issue was the work was not new. You then convinced him the work was new, so he changed the status and gave you the review(s). 


  Is it a good sign or editor is just passing time ?


I can assure you that the editor is not just passing time. I think you have an uphill battle still to convince the editor and reviewer that the work is new. It also seems like you may not be as clear as you could be.

As for whether it goes out for review again, that depends on the editor.