Take a look at the following links for more info on binding Telerik Report to a stored procedure:
As described in the Adding a Data Source through NeedDataSource report event
help article, the event is fired only if the report has no data source
Also note that the DataSource should be set to the Processing report object and not to the Definition object (i.e. this.DataSource). More info on Processing and Definition items is available in Understanding Events article.
the Telerik team