The Interior Ministry said the one-story house was demolished because it was built illegally on land earmarked for a school. The ministry said it was unaware an injunction had been issued pending a court hearing.
Shlomo Lecker, a lawyer for the homeowner, said he would file a police complaint against the Interior Ministry, along with a demand for compensation.
In recent years, Israel has demolished dozens of houses built without permits in traditionally Arab east Jerusalem. Since 1999, 86 homes have been razed, including 64 under construction, the Israeli human rights group B'tselem said.
The Palestinians hope to establish a future capital in east Jerusalem, the sector captured by Israel from Jordan in the 1967 Mideast war. Israel says it will never relinquish control over all of the city.
Palestinians say they have no choice but to build illegally because they are rarely granted permits. Jerusalem city officials have acknowledged that the government is trying to limit Palestinian population growth in Jerusalem.
Homeowner Jawad Suwaiti received a demolition notice from the Jerusalem municipality in June, but the Local Affairs Court issued a temporary injunction.
An Interior Ministry spokeswoman said the onus was on the homeowner to present the court order when the wrecking crew arrived Monday. No order was presented, she said.
Suwaiti, a 38-year-old gardener who has lived in the house with his mother for the past year, said he presented the court order Monday, but that he was hit and shoved aside by security forces.
"All my money was invested in the house. Now it's all gone," said Suwaiti.
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