We have investigated the variation in the magnetization of highly ordered pyrolytic graphite (HOPG) after neutron irradiation, which introduces defects in the bulk sample and consequently gives rise to a large magnetic signal. We observe strong paramagnetism in HOPG, increasing with the neutron fluence. We correlate the induced paramagnetism with structural defects by comparison with density-functional theory calculations. In addition to the in-plane vacancies, the trans-planar defects also contribute to the magnetization. The lack of any magnetic order between the local moments is possibly due to the absence of hydrogen/nitrogen chemisorption, or the magnetic order cannot be established at all in the bulk form.