The quote "I have committed incest I said Father it was I it was not Dalton Ames" brings attention to Quentin's relationship with Caddy. It's a bit confusing but after reading it over a couple of times it seems like he didn't really have a sexual relationship with Caddy, but instead he is ashamed of Caddy's promiscuous behavior.

Quentin is a clean and orderly fashioned man compared to Caddy who is a wild and impure. Quentin loved Caddy almost in a sexual way but was ashamed of her losing her virginity to Dalton Ames. When he said the quote it was in italics so it was a flashback to when he was writing the two letters one to his father and the other to Shreve. Quentin feels he should have said he and Caddy committed incest. He thinks the shock of their mutual incest would lessen the shame...