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Guys I got it working. At the time you get this error in aodh-notifier.log, do check your syslog file for same message and check lines above it. You will find something like this:

Apr  3 14:15:56 controller heat-api-cfn[1179]: 2017-04-03 14:15:56.889 1179 INFO heat.api.aws.ec2token [-] Authenticating with http://controller:5000/ec2tokens
Apr  3 14:15:56 controller heat-api-cfn[1179]: 2017-04-03 14:15:56.906 1179 INFO heat.api.aws.ec2token [-] AWS authentication failure.

Last line is the root cause of this problem. Now go to heat.conf and modify this:

[ec2authtoken]
auth_uri = http://controller:5000/v3

Adding v3 at the end of auth_uri solved my error. I am able to auto-scale now.