Actionable Feedback Window has two buttons at the bottom – "Submit" and "No thanks". Feedback form always create KB feedback and converting feedback in KB feedback task table by clicking "No thanks".This seems incorrect.Feedback should be submitted when we select some option in the pop and provide comments and click submit.
Ideally, no Feedback or feedback task should be created clicking on no thanks.

Is this by design or a product defect?

This is working as per design, the popup is meant to get additional information from the user.
If the user click's "no thanks" button, we will create the feedback task with default data.
The feedback task creates when any user gives negative feedback.