The correct answer is option 1 - "Human eye is a refracting system containing a diverging lens." This statement is not correct. The human eye is actually a refracting system containing a converging lens. The lens in the eye helps to focus light onto the retina, which is located at the back of the eye.

Option 2 is correct. The retina of the human eye does contain millions of light-sensitive cells called rods and cones. These cells convert the light entering the eye into electrical messages that can be sent to the brain for interpretation.

Option 3 is also correct. Every image that is focused on the retina is indeed upside down. However, our brain processes and interprets the visual information in a way that allows us to perceive the world upright.

Option 4 is also correct. We do need both eyes to judge the relative positions of objects accurately. The brain combines the visual input from both eyes to create depth perception and perceive the distance and position of objects in our environment.

Therefore, the only incorrect statement is option 1 - the human eye is not a refracting system containing a diverging lens.