Use the URL that worked for you originally.
engine_handle = create_engine('mssql+pyodbc://sa:pass@<IP address>/master', echo=False)
Then you can issue CREATE DATABASE
command, or whatever other operation you need to do.
When you leave out the database name, sqlalchemy
is looking for a DSN named after the IP address you specify. Of course, the DSN doesn't exist and the exception is thrown. You must use a valid connection URL like those documented here.
Regarding the comment about not wanting to connect to a database - Each time you connect to SQL Server, your connection must have some database set for the connection. When created, your login had a default database assigned (if not specified, master
is used).