Shefali,
This depends on the user permission level. If they do not have access to Task Management (i.e. Time & Expense or Social User), they will not be able to do this. They will only be able to create To Do lists which are not related to a Project.
If this is not the case and further investigation is required, this really requires a case. it is a bit tough to figure out the issue through a forum post when there are not screen captures provided. Opening a case, providing screen captures and Granting Login Access to take a closer look would be the best way to get this resolved quickly.
Sincerely,
Boris
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