I think that you need to look at the context in which the convention was written (immediately after World War II), and the clauses implicit intent: "The Occupying Power shall not deport or transfer parts of its own civilian population into the territory it occupies." Israel has neither "deported" or "transferred" parts of its own civilian population. The article above was intended to prevent the occupying power (e.g. Germany) from deporting or transferring its own population (e.g. German Jews) to the territories it occupied (e.g. Poland). Perhaps it is wrong for a country to occupy land and then allow its citizens to settle on that land without annexing it, but that is not what Article 49 says.
Migrants rush train tracks as Budapest station reopens (dpa)
from the article: Boycott Ariel college