Bronx New York Version from the 1970s:

Look whos here
Punchanella Punchanella
Look whos here
Punchanella in a shoe
(children circle around one kid while singing)

Well what can you do
Punchanella Punchanella
What can you do
Punchanella in a shoe
(child in the middle usually does a dance move)

Well we can do it too
Punchanella Punchanella
We can do it too
Punchanella in a shoe
(other children copy dance move)

So who do you choose
Punchanella Punchanella
Who do you choose
Punchanella in a shoe
(child closes her eyes and spins with her finger pointing out. whomever she is pointing to when the song stops, goes to the center next)

Thank you for posting this. My sister posted this song on FB and we all knew the words, but no one knew the origins.