Thank you Frank and Tom for your replies and ideas. I hope this reply goes to all, including a copy to me (not sure how this works).

Tom, if I understand correctly, epaulettes are those ornamental decorations with fringes that are over the shoulder. I don’t see any in the picture I submitted.  

Many years ago I went to the Museum of Military History. I did not have this picture but I had one of his older brother, my grandfather in uniform (WW1), but they were not able to help me. Conversation was a bit difficult because my Hungarian is very basic. I will write to them, maybe now they have someone that knows English.

As far as I know, my great-uncle was still living in Dunaszerdahely. If it was the Czech army, why would the sign be in Hungarian?