Smaller code to test my problem:
/*Author: Ajay Partoti
This is the smallest code to illustrate my problem
Before running this program
Please make sure u had screen.jpg and actionsdemo.jpg in your
Test program directory*/

import javax.swing.*;
import java.awt.*;
import java.awt.event.*;

public class Test extends JFrame
{
    //Declare variables....
    private JPanel picpnl;
    private JButton refresh;
   private Image image;

   public Test()
    {
        //Set container to BorderLayout....
        Container c = getContentPane();
        c.setLayout( new BorderLayout() );

                              //Add button to container
        refresh=new JButton("refresh");
    image = Toolkit.getDefaultToolkit(  ).getImage("screen.jpg");
                      //Add actionListener to button refresh...
               refresh.addActionListener(
         new ActionListener(){
         public void actionPerformed(ActionEvent e)
             {
         if(e.getActionCommand()=="refresh")
                 {
 /*THIS IS WHERE THE PROBLEM IS...
 AT RUNTIME I DIDN'T GET THE SECOND IMAGE TO PAINT ON JPANEL*/

 image = Toolkit.getDefaultToolkit(  ).getImage("actionsdemo.jpg");
picpnl.add(new JScrollPane(new
ImageComponent(image)),BorderLayout.CENTER);
                     picpnl.setVisible(true);
                     JOptionPane.showMessageDialog(Test.this,"I didn't get the new
image on JPanel...");
                 }
             }
         }
         );

        //Declare picpnl as JPanel

        picpnl = new JPanel();
        picpnl.setLayout(new BorderLayout());

//Add scrollPane component by using   Imagecomponent class
        picpnl.add(new JScrollPane(new
ImageComponent(image)),BorderLayout.CENTER);
       picpnl.setVisible(true);

        //add button and picpnl and set visible
        c.add(refresh,BorderLayout.NORTH);
        c.add(picpnl,BorderLayout.CENTER);

        picpnl.setVisible(true);
        setSize(300,300);
        show();
    }
 class ImageComponent extends JComponent {
    Image image;
    Dimension size;

    public ImageComponent(Image image) {
      this.image = image;
      //Set MediaTracker to observer images...
      MediaTracker mt = new MediaTracker(this);
      mt.addImage(image, 0);
      try {
       mt.waitForAll(  );
       }
   catch (InterruptedException e) {
     // error ...
   };
         //get and set Dimensions
   size = new Dimension (image.getWidth(null),
                         image.getHeight(null));
   setSize(size);}

    public void paint(Graphics g) {
          //repaint images on the screen....
    g.drawImage(image, 0, 0, this);

 }

 public Dimension getPreferredSize(  ) {
   //Get the size...
    return size;
 }

}
 public static void main(String[] args)
    {
      Test app = new Test();
      app.addWindowListener(
          new WindowAdapter(){
                public void windowClosing( WindowEvent e )
               {
                    System.exit( 0 );
                }
          }
        );

    }
};