AKS can't modify AGIC on ingress creation due to the policy

I've just finished setting up AKS with AGIC and using Azure CNI. I'm trying to deploy NGINX to test if I set the AKS up correctly with the following configuration:

apiVersion: networking.k8s.io/v1
kind: Ingress
metadata:
  name: nginx-ingress
  annotations:
    kubernetes.io/ingress.class: azure/application-gateway
    kubernetes.io/ingress.allow-http: "false"
    appgw.ingress.kubernetes.io/use-private-ip: "false" 
    appgw.ingress.kubernetes.io/override-frontend-port: "443"
spec:
  tls:
    - hosts:
        - my.domain.com
      secretName: aks-ingress-tls
  rules:
    - host: my.domain.com
      http:
          paths:
          - path: /
            pathType: Prefix 
            backend:
              service:
                name: nginx-service
                port:
                  number: 80

apiVersion: apps/v1
kind: Deployment
metadata:
  name: nginx-deployment
spec:
  replicas: 1
  selector:
    matchLabels:
      component: nginx
  template:
    metadata:
      labels:
        component: nginx
    spec:
      containers:
        - name: nginx
          image: nginx
          ports:
            - containerPort: 80

apiVersion: v1
kind: Service
metadata:
  name: nginx-service
spec:
  type: ClusterIP
  selector:
    component: nginx
  ports:
    - port: 80
      protocol: TCP

There's no error or any other log message on apply the above configurations.

> k apply -f nginx-test.yml
deployment.apps/nginx-deployment created
service/nginx-service created
ingress.networking.k8s.io/nginx-ingress created

But after a further investigation in the Application Gateway I found these entries in the Activity log popped up at the same time I applied the said configuration.

Further details in one of the entries is as follows:

• Operation name: Create or Update Application Gateway
• Error code: RequestDisallowedByPolicy
• Message: Resource 'my-application-gateway' was disallowed by policy.

  [
    {
      "policyAssignment": {
        "name": "Encryption In Transit",
        "id": "/providers/Microsoft.Management/managementGroups/***/providers/Microsoft.Authorization/policyAssignments/EncryptionInTransit"
      },
      "policyDefinition": {
        "name": "HTTPS protocol only on Application Gateway listeners",
        "id": "/providers/microsoft.management/managementgroups/***/providers/Microsoft.Authorization/policyDefinitions/HttpsOnly_App_Gateways"
      },
      "policySetDefinition": {
        "name": "Encryption In Transit",
        "id": "/providers/Microsoft.Management/managementgroups/***/providers/Microsoft.Authorization/policySetDefinitions/EncryptionInTransit"
      }
    }
  ]
  

My organization have a policy to enforce TLS but from my configuration I'm not sure what I did wrong as I have already configured the ingress to only use HTTPS and also have certificate (from the secret) installed.

I'm not sure where to look and wish someone could guide me in the correct direction. Thanks!