Why All 1's used as a second input in decrement operation of ALU?
Because all 1s is -1 in twos-complement encoding.

Think about it.  With a N-bit number, adding 2N doesn't change the value because the change is in the first bit past the number.  For example, consider adding 16 to a 4-bit number.  In binary that is:


    XXXX
 + 10000
 -------
   1XXXX

which is still just XXXX because by definition of a 4 bit number you only save the 4 bits.

So if adding 2N yields the same value, then adding 2N-1 will yield one less, which is the same as subtracting 1.