The Commission of Laws, which reviews texts before they are debated, on January 17 said the bill was unconstitutional as it violates freedom of speech.
The commission's recommendation is nonbinding.
The bill goes to the full Senate for a vote on January 23 where correspondents say it has broad support.
The lower house of parliament has already adopted the bill, which punishes offenders by up to a year in prison and 45,000 euros ($57,000) in fines.
The bill sparked a diplomatic row with Turkey which denies the killings during World War I were genocide.
compiled from agency reports