Actually it is allowed, but only if both teams agree to it.
In the early days of cricketing history, underarm bowling was the only method of bowling. It was quickly found, however, that a raised arm imparted more accuracy. Due to this under-arm action became less popular and ultimately extinct. But it still remained legal.
Then an infamous "underarm bowling incident" occurred during a match in 1981, in which the Australian bowler, Trevor Chappell, took advantage of the fact that underarm bowling was still legal by rolling the ball along the ground. By doing so he avoided the possibility that the New Zealand batsman, Brian McKechnie, would score a six from the last ball to tie the match, as the bat would not be able to hit the ball high enough to score a six. As a result of this incident underarm bowling was subsequently made illegal in all grades of cricket, except by prior agreement.
Here is the law (24-1-b)
Underarm bowling shall not be permitted except by special agreement between the two teams, before the match
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@LionKing
True, it's allowed if the two teams agree but I doubt it will ever happen.